The total was split between £0.7bn in credit card borrowing and £0.9bn in other forms of credit including car finance agreements and personal loans.

The annual growth rate for consumer credit grew to 7.9% in March from 7.7% in February, rising for the seventh month in a row.

For credit card borrowing, the annual growth rate fell from 13.2% in February to 12.8% in March while for other forms of consumer credit the rate rose to 5.8% from 5.4%, according to the Money and Credit report from the Bank of England (BoE).

It comes as inflation remains stubbornly high and millions of households are struggling with the cost-of-living crisis.

Three-quarters of UK adults have cut back on spending because of rising prices and more than a quarter (26%) have turned to credit cards, overdrafts or loans, according to a report from the Resolution Foundation.

Food banks have also seen record demand in the last year, giving out three million emergency parcels, more than a million of which were distributed to children.

Households took out £4.8bn from banks and building societies in March but also deposited £6.5bn. Savers also deposited £3.5bn into National Savings and Investment (NS&I) accounts, the highest amount since September 2020.

There was also a significant rise in mortgage approvals for house purchases, up to 52,000 in March from 44,100 in February. But mortgage lending fell to the lowest rate for 12 years, excluding the months at the start of the pandemic when the UK was in lockdown.

‘Spending our savings and racking up borrowing’

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “We’re spending our savings and racking up borrowing, but this may not be the harbinger of doom it initially seems.

“The way we’re borrowing, and the fact we’re also flocking to the mortgage market, means there’s every chance we’re splashing the cash because we think we can see light at the end of the tunnel.”

Alice Haine, personal finance analyst at Bestinvest, said: “The sad reality is that turning to credit to meet everyday living costs is the only solution for many households, with borrowing jumping by £1.6bn in March, up from £1.5bn in February.

“For consumers buckling under the cost pressures, turning to high-interest credit cards to cover higher living costs should only be a last resort. Debt can compound out of control very quickly if not managed effectively leaving borrowers in a tight financial spot.

“While parents or friends may be able to help out in the short-term, if proper repayment terms aren’t agreed this can strain relations. Those living outside their means on a regular basis should first find ways to cut expenditure and manage debts before they seek out extra finance.”

‘Individuals are seeking more secure saving options’

Charlotte Nixon, mortgage expert at Quilter, said: “Despite the cost-of-living crisis stretching budgets each month, £3.5bn was deposited into National Savings and Investment (NS&I) accounts in March, the highest since September 2020, a time when some people had more money to save due to an inability to do much else because of lockdown. This uptick in savings suggests individuals are seeking more secure saving options and are taking advantage of higher interest rates.

“In light of these varying economic factors, it’s essential for individuals to carefully consider their borrowing and saving strategies. With fluctuating interest rates and mortgage approvals, prospective homebuyers and existing homeowners should seek professional advice to make informed financial decisions tailored to their unique circumstances, as the market continues to grapple with the multitude of challenges.”