Consumer credit 'increases by 40%' in Scotland

One in three people paid for Christmas using credit, according to new research

One in three people in Scotland paid for Christmas using credit, often with higher interest rates than in the rest of the UK, a study has suggested.

Research by Citizens Advice Scotland indicated that consumer debt had increased by 40% in five years.

Highlands and Islands MSP David Thompson has called for the UK to have an interest rate cap, similar to other countries in the EU.

But the UK government rejected the idea last October.

It said this would carry "significant pitfalls" and could encourage illegal lending.

The lending situation in Scotland is completely out of control right now David Thompson Highlands and Islands MSP

However, Mr Thompson said a cap would ensure that banks and borrowers take responsibility for debt.

He said: "In the aftermath of Christmas many people will be tightening their belts and beginning to look back at what has been spent.

"Over £271m of debt has been dealt with by Citizens Advice Scotland this year as consumer debts increased by 40% over the last five years."

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Mr Thompson said the consumer credit situation in Scotland was "unsustainable".

"Borrowers and lenders both have a responsibility to control debt levels and an interest rate cap is a key part of that package," he added.

"The lending situation in Scotland is completely out of control right now."

Mr Thompson, who has campaigned on the issue, said he was recently offered an easy access loan by e-mail with a 1,734% interest rate.

He added: "Countries across the EU and around the world have interest rate caps but the UK government continues to refuse to take action."

He said that about 45,000 people in Glasgow are borrowing at rates of about 164%.