Consumers have learnt how to handle credit

The figures are stark and seem, on the face of it, shocking. Total household debt in this country has reached one trillion pounds, equivalent to almost £17,000 for every man, woman and child. With interest rates starting to climb, what we have here is surely a time bomb, guaranteed - unless we see the error of our ways - to explode in mass bankruptcy and destitution.

The figures are stark and seem, on the face of it, shocking. Total household debt in this country has reached one trillion pounds, equivalent to almost £17,000 for every man, woman and child. With interest rates starting to climb, what we have here is surely a time bomb, guaranteed - unless we see the error of our ways - to explode in mass bankruptcy and destitution.

There have been, and regrettably there will continue to be, tragic cases of individuals who stretch their credit beyond all reasonable limits and fail to cope. There will always be those, too, for whom one more store card, one more tempting 0 per cent credit offer, will be one spending opportunity too far. Many of these people (and they are not only clothes-struck young women or beer-soused undergraduates) will be paying for their fecklessness, in cash and in comfort, for many more years than it took to run up the debt.

Surprisingly, perhaps, given the moralising scare stories that tend to dominate the news, the instances where people's ambitions overtake the capacity of their wallets are few and far between. The profligate are not only a minority; they are a tiny minority. Most people recognise the benefits of debt and apply common sense when they use it. A recent Mori survey showed that, contrary to the widespread belief, more than two-thirds of credit-card holders pay off the debt every month. Many others are on 0 per cent deals.

Nor are those who do not pay off the debt each month, or who accept loans at what seem extortionately high rates, necessarily irresponsible. As no less an authority than the Chancellor well knows, the judicious use of credit oils the wheels of the economy - and this applies to family and individual budgets too.

What we are witnessing is less a dangerous build-up of debt than the democratisation of credit - a trend that has benefited millions of us. Even a generation ago, obtaining a mortgage or a loan was impossible for very many people - to their own detriment and that of the economy as a whole. Now, we are offered some of the most flexible and imaginative credit arrangements in Europe and we are learning how to use them.

Time was when the standard view of debt in Britain was that of Dickens' Mr Micawber: "Annual income twenty pounds, annual expenditure twenty pounds ought and six: result - misery." Thanks to a combination of modern technology, modern thinking and increasingly savvy consumers, this is no longer automatically true.