Brits are increasingly using multiple credit cards to manage existing debt according to new research, with Joe Smithies, Head of Advice at PennyPlan pointing out the warning signs that borrowing could be becoming a cycle that’s harder to escape.

Analysing recently published data from YouGov, the leading debt solutions provider highlights that while 68% of Brits have at least one active credit card isn’t surprising, the reasons for holding multiple cards changes significantly as the number of cards increase is worrying.

In fact, almost half of people (47%) with five or more credit cards say managing debt is the reason for them holding multiple cards, with more than half (54%) also stating they don’t pay off their full balance each month, the highest of anyone.

Almost a quarter of those (22%) only make the minimum repayment each month, almost three-times the number of people with one or two credit cards.

Joe said: “Credit cards can be incredibly useful as a borrowing tool, and it’s positive that the vast majority of people in the UK – 69% of single card users, 65% of two-card users – do pay their balance back in full each month. However, it’s clear that the more cards people take on, the more difficult finances become to manage with debt mounting.”

He added: “Paying the minimum amount on a credit card can set a dangerous precedent, particularly if a person continues to actively use them. In some cases, people are barely covering the interest and over time it can lead to finances feeling unmanageable.”

Often that can lead to a spiralling effect, evident by the fact that 26% of people holding five or more cards admitting they are likely to apply for another credit card in the next 12 months, compared to just 9% of single-card holders.

Joe continued: “For many of those respondents, it could well be a case of using new borrowing to manage existing financial commitments, which isn’t the intended usage of a credit card. It’s important to understand whether your credit cards are purely masking a debt problem, or they are being used responsibly.”

Five warning signs your credit cards could be masking a debt problem

To help people understand when their credit cards are no longer being used as a convenient payment method, but rather a debt control tool, Joe Smithies has highlighted some of the key warning signs:

1. Regularly transferring balances between cards

Balance transfers can be useful for reducing interest costs, but repeatedly moving debt from one card to the next without reducing the overall amount owed is essentially just kicking the can down the road and delaying the problem.

2. Only being able to afford minimum repayments

Making the minimum payment does keep an account in good standing, but it does mean that debt will take longer to repay and accumulate more interest. If you’re regularly or only paying the minimum because you have little money left over, then it is a bit of a red flag and is likely worth seeking advice.

3. Applying for additional cards to free up available credit

Taking out further credit cards to access a fresh credit limit may well provide some short-term breathing space, but it will not address the underlying debt and is likely to only add to the debt accumulated.

4. Your total credit card balances are increasing

Having several credit cards is not necessarily a problem if the balances are managed responsibly, but if the combined amount is increasing each month, even when making regular repayments, borrowing could eventually become unsustainable.

5. Treating your credit as an extension of your income

Credit card balances are a figure you are able to borrow, not an extension of your income. Thinking of it as additional funds for you to spend can be dangerous compared to a short-term agreement that you will pay back when your statement arrives.

Joe concluded: “It’s important to look at the bigger picture rather than focusing on individual card balances. Add everything you owe across your cards, check how much interest you’re paying and work out how much you can realistically afford to pay each month.”

“If you’re only managing minimum payments or regularly need to borrow more to cover existing commitments, don’t wait until you miss a payment before seeking help. There is plenty of advice and professional help available to you to understand your options and put a realistic plan in place.”