Latest figures from the Bank of England show that for the first time since August 2020, consumers borrowed more than they paid off in May this year – with unsecured lending rising by a net £280 million from April.

The report shows that while borrowing on credit cards remained weak, people took out more personal loans as well as ‘other’ forms of credit, such as dealership finance on cars.

While introductory deals on credit cards and finance schemes can seem tempting on the surface, it’s easy to be drawn into repayments that become unmanageable, leading quickly to mounting debt.

James Andrews, senior personal finance editor at money.co.uk said: “When it comes to personal loan repayments, it’s important to note that any time you break the agreed repayment terms you risk negatively impacting your credit score.

“Even if it’s for a minor amount, late or missed payment notices are held on your credit file, which can affect your ability to borrow in future. While this may seem like a minor detail right now, in practice it means that it’ll be harder to get a loan in future if you have a record of missing payments.

“Also when you miss a payment, you miss out on your monthly chance to reduce the loan, meaning you end up paying more interest. Effectively, this means that every missed payment increases the amount you have to pay back, as well as the duration of the loan.

“If your debt is on a credit card, missing your monthly payment is one of the worst possible offences. As well as the same negative effect on your credit score, you’re often charged a penalty which will only add to your financial strain.

“The easiest way to avoid missed payments is to prioritise your debts early on, so you don’t end up in this situation. Keep a list of all the different amounts you owe, such as credit card bills, car finance payments and any BNPL (buy now pay later) deals you may have taken on other goods.

“Make sure when you’re adding to your list that you take into account any 0% interest deals that you may be signed up for. This means you will be able to prioritise debt that you’re currently paying interest on over those you’re not.

“If you do miss a payment for whatever reason, don’t just sit back and do nothing, there are options available, you just need to speak to your creditors. If you get in touch with your lenders to explain the situation – the missed payment may have been out of your control – you can try to re-negotiate your payment plan with them.

“If you’re still struggling to cope with your debt and don’t know who to turn to, there are various services that can provide independent, impartial advice, such as StepChange Debt Charity, Citizens Advice or the National Debtline.”