An average person's debt has soared by 50% since 1997 to more than £5,000, new figures show.
Figures from the Office for National Statistics showed people now owed an average of £5,330 in unsecured debt, which excludes mortgages, according to the Liberal Democrats.
The figures come as the Bank of England's Monetary Policy Committee is widely tipped to raise rates by 0.25% to 3.75% - the first rise in almost four years.
Vince Cable, Lib Dem Shadow Chancellor, said: "With interest rates set to start rising immediately, the ticking debt time bomb is now set to
"Many people who have borrowed to the limit are going to regret pushing their debts up so high."
Debt adviser Debt Free Direct also warned a rates rise could lead to a dramatic increase in the number of people going bankrupt.
Chief executive Andrew Redmond said: "Interest rates are at their lowest level since the 1950s and people are borrowing more and more money.
He added around 16% of people have debts of £10,000 to £40,000 - before their mortgages are taken into account.
"Many are finding it increasingly difficult to make their interest repayments and, if the Bank of England base rate rises over the coming months as many people are predicting, there could be a dramatic rise in personal bankruptcies," Mr Redmond warned.
The figures came as research for CPP Group, which offers credit protection products, found that one in four people are now worried they will not be able to keep up with debt repayments in the next three months.
Of 2,000 people surveyed by research company RSGB around 29% said they were in danger of falling behind with their mortgage payments.
Meanwhile, 22% feared they will not be able to pay their council tax and 12% thought they would be unable to keep up with their credit card payments.
But more research, released by Morgan Stanley, showed that despite the concerns credit card spending is set to soar in coming months as more people use their plastic to pay for Christmas.
Britons plan to spend an average of £1,284 on their credit cards in the three months to the end of December - 42% more than they thought they would spend in the previous three months.
Topping the credit card spending list was holidays, while splashing out on food, clothing and present are all expected to rise, a poll of 2,000 people found.
The Consumer Credit Counselling Service, which offers advice on debt, has urged people to re-assess their budgets so they can meet existing commitments if rates go up.
Chairman Malcolm Hurlston said: "In recent months I have become concerned about a culture of complacency in the UK with too few people willing to take action to address their personal financial situation.
"Whilst the direct impact of this rate rise should be limited, I hope it will act as a wake-up call and encourage people to review their budgets."