George Osborne told the Credit Today conference that an “imaginative solution” was needed to tackle debt problems before lives are destroyed.
“The expansion of credit has brought challenges,” warned Mr Osborne. “For some, especially vulnerable families, too much debt can cause misery and great financial hardship.
“For families and for the wider economy, more debt means more vulnerability.”
His warnings come as UK debt levels pass the £1.1 trillion mark and average personal debt stands at over £4,000, with a rise in the number of people contacting Citizen’s Advice for debt management help.
Though he praised greater credit levels as a boost to freedom, the shadow chancellor urged better debt management to stop credit affecting lives, especially in “vulnerable families”.
With people using credit cards even when “not needed”, Mr Osborne said that debt was being fuelled and risked family life, which could lead to social problems.