The number of Britons defaulting on credit card payments has risen for six consecutive quarters, marking the longest streak since the 2008 financial crisis. According to recent Bank of England survey data, more lenders reported an increase in credit card defaults in the third quarter of 2026 than a decrease, with a net balance of 26 percentage points. Default rates have been climbing for 18 months, and banks expect this trend to continue into the final quarter of the year.
Separate data published by the Bank of England in September showed that consumer borrowing surged by £2.46 billion in August, the largest monthly increase on record since 1993. This figure encompasses various types of retail credit, including car finance and personal loans. Notably, credit card lending itself rose by £1.18 billion, representing the fastest rate of growth since 2004.
These shifts in borrowing and defaults come amid rising financial pressures on households. Mortgage rates have increased, and energy costs remain elevated, partly due to ongoing geopolitical tensions in the Middle East. Inflation rose to 3.1 percent in August from 2.9 percent in July, reaching its highest level since the outbreak of conflict in Iran earlier this year. Inflation is projected to hit 4 percent early next year.
Energy price volatility has been influenced by the prolonged conflict in the Middle East, pushing Brent crude oil prices above $100 per barrel. Recently, prices nudged past $105 amid concerns from an approaching hurricane that prompted reduced production by several U.S. suppliers. The Bank of England has described the Iran conflict as causing a “protracted negative supply shock to the global economy.”
A report from the Bank’s Financial Policy Committee highlighted that this supply shock has contributed to rising sovereign bond yields across many advanced economies, reaching levels not seen since 2008. While the report noted that UK economic growth had been more resilient than anticipated, it also warned that challenges related to the conflict—including higher energy prices and tighter financial conditions—would continue to exert pressure on households and businesses.
Despite these headwinds, indicators of financial distress have remained relatively subdued. Household and corporate balance sheets appear strong overall, and total indebtedness levels remain low compared to historical averages. The Bank’s findings suggest that while borrowing and defaults are increasing, the broader financial system and consumer balance sheets maintain a degree of resilience in the current environment.