A “perfect storm” of factors including rising inflation, stagnant wages, climbing credit card rates, pricey car loans and pension pot raiding could tip many over the edge.

Total consumer debt hit £200billion in December according to credit ratings agency Standard & Poor’s.

PFS chief executive Keith Richards said this is becoming unsustainable: “Borrowing levels are at a high not seen since the late 1980s, when consumers became so mired in debt that record numbers of personal bankrupticies and home repossessions took place.”

Many are now stacking up debt onto different interest-free credit cards, bank loans and car finance deals, he added.

Credit card rates are at a 10-year high, at an average APR of 23 per cent, according to data from MoneyFacts.co.uk.

That is an incredible 46 times today’s base rate of just 0.5 per cent.

“Consumers could get caught out if they became unable to keep hopping from one interest rate-free period to another,” Richards added.

At the same time, people cannot afford to set enough aside for a comfortable retirement, while the over-55s risk ruin in later life by taking advantage of pension freedom reforms to draw large sums out of their pots, he warned.

Official figures show that the average family spent £554.20 a week last year, levels last seen before the financial crisis, with big increases in spending on cars and package holidays.

The savings ratio fell to 7 per cent, the lowest level since 2006. Sarah Coles, personal finance analyst at Hargreaves Lansdown, said a deadly combination of cheap credit and low savings rates is tempting people to spend rather than save.

“Zero per cent credit cards and car finance deals with little or nothing to pay up front are persuading people they can afford that foreign holiday or new motor,” she said.

She urged everyone to build a pot equivalent to three to six months of living expenses as an emergency savings net. 

Richards suggested consolidating debts onto a single lower rate, such as on a balance transfer card, to allow you to pay it down faster: “If you have equity in your home you could extend your mortgage to pay down expensive card debt.”

Think carefully before buying a shiny new car, as motor finance such as a personal contract plan (PCP) makes luxury cars seem affordable.

Richards said: “Is a PCP really the kind of debt you want to take on for the next three years or so?”

Similarly beware of “buy now, pay later” holiday offers. 

“Look at the small print. Are you repaying at a horrendously higher interest rate?

"Monthly repayment plan APRs can be massively expensive,” he said.

Richards also urged consumers to avoid expensive shop store cards and bank overdrafts, or set up an agreed overdraft facility before going into the red: “Otherwise crippling repayment charges may be applied.”

He said never forget the golden rule of debt: “The money must always be paid back.”