The Bank of England’s Financial Stability Report has revealed that thousands of families are becoming insolvent after years of credit card spending in the past decade.

The Bank of England report highlighted the fact that lenders are writing off a record amount of credit card debt as thousands of people head towards insolvency and families are at further risk as lenders have responded by pushing up interest rates.

Over the past year lenders have written off over £4.5billion worth of credit card loans. Despite the base Bank rate being fixed at 0.5% since early 2008, credit card interest rates have continued to rise.

Separate research by the insolvency trade body R3 has also warned of an insolvency ‘crisis’ in the UK. Their research has shown that 146,948 people will be made insolvent this year across England and Wales – a 10% increase from last year.

The President of R3, Steven Law, said: “We stand on the brink of a personal insolvency crisis that will take years to work through the system.

“We know there are nearly a million people out there who are struggling with their debt.

“While it may be the case that these problems are resolved without help, there is a risk that they might snowball out of control.”

Lending criteria have been tightened after lax lending rules led to a wealth of credit cards and loans being taken out in the past decade, in the run up to the recession. The Budget which was announced this week aims to significantly reduce the UK’s debt deficit.