Why Debt Consolidation Loans Are Surging in the UK — And What to Do About It
Paul · Head of Lending Research & Content
April 2026 · 9 min read
UK household debt stands at £1.9 trillion. Consumer credit grew 8.5% in the year to February 2026 — the fastest growth since before the pandemic. Credit card borrowing alone has hit £73.2 billion, growing at 12.1% annually. The numbers tell a clear story: more people are borrowing, and more people need to consolidate.
The Numbers Behind the Surge
UK debt snapshot — February 2026 (Bank of England data)
| Metric | Figure |
|---|---|
| Total household debt | £1.9 trillion |
| Consumer credit growth (annual) | 8.5% |
| Credit card debt outstanding | £73.2 billion |
| Credit card growth (annual) | 12.1% |
| Average non-mortgage debt per household | £18,392 |
| Bank of England base rate | 3.75% |
Why Consolidation Makes Sense Right Now
If you are paying 21.75% on credit cards (the current average effective rate) and have multiple debts, consolidating into a single loan at a lower rate can save hundreds. 118118 Money at 49.9% APR sounds high compared to a credit card — but with fixed monthly repayments and a clear end date, many borrowers pay less overall.
The danger is consolidating and then running up the old credit cards again. Close the accounts after paying them off. A consolidation loan only works if it replaces your existing debt, not adds to it.
Paul's verdict
Consolidation is a tool, not a solution. It simplifies your repayments and can reduce total interest — but only if you close the old accounts and do not borrow again. If you are in serious difficulty, StepChange (0800 138 1111) should be your first call, not a consolidation loan.
See our full debt consolidation loans comparison, or read what "in debit" actually means if you are seeing it on your bank statements.
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