LOW interest rates are fuelling credit card debt because mortgage borrowers are being tempted to pile more on their plastic than they are saving in home loan rate reductions.

Insolvency experts are urging caution with the prospect of higher consumer spending this Christmas.

"A total of two per cent interest rate charges on a mortgage of £75,000 saves a homeowner around £1,500 a year," said David Smithson, senior manager at Bournemouth-based business recovery and insolvency firm BKR Haines Watts.

"This encourages increased spending but when credit cards are used many people far exceed the money they have saved and cause themselves problems."

In many cases these credit card balances "are in excess of £3,000 so paying off as much as possible has to be the best policy".

Britain has the worst record in Europe for debt, warns the Consumer Credit Counselling Service, a registered charity.

Last year its helpline teams received more than 90,000 calls for help from people who have got themselves too deeply into debt.

The lowest interest rates in 46 years are tempting some households to borrow up to the hilt with disastrous results.

Over-acquisitive families tempted by cheap loans are not leaving themselves any financial leeway in case they are hit by unforeseen problems such as redundancy or divorce.

"This is the first time for decades that we are having a difficult time economically when interest rates are so low," said CCCS spokesman Amy Brown.

Some borrowers were "spending right up to the limit. If something happens they have no give at all, no safety net.

"Redundancy and relationship breakdown are the two things that really send people over the edge," she added.

Debt and its acceptability were also becoming more deeply ingrained in the UK culture as a result of student loans, she added.

Loan payments should not exceed 20 per cent of income, she warned.

Consumer Credit Counselling Service freephone helpline, 0800 138 1111 (open 8am-8pm every day).