More than 1.5 million families are in extreme debt, fuelled by the "collapse" in the value of pay, a new report says.
Total unsecured debt, excluding mortgages, for UK households increased by £48 billion in the three years to 2015 to £353 billion, according to the TUC and Unison.
Their report, Britain In the Red, said 3.2 million households are in "problem debt", paying out more than a quarter of income on unsecured debt repayments, while 1.6 million are in "extreme problem debt", shelling out 40% on repayments.
The problem is getting worse following a collapse in wages, which fell by over 10% between 2007 and 2015, the report warned.
TUC general secretary Frances O'Grady said: "Families can't continue relying on credit cards and loans to get by, but with the average wage still worth £40 less than before the 2008 crash, lots of families have little choice.
"Higher wages must be at the heart of the Government's economic plan. We need a return to proper year-on-year pay rises, and a higher national minimum wage.
"And we need public investment in major infrastructure projects to create more well-paid jobs and build a stronger economy.
"The Government must also do more to help low-income families struggling with problem debt in getting access to debt restructuring and insolvency support."
Unison general secretary Dave Prentis said: "Many of those affected by debt will be public service workers who have suffered eight years of zero pay rises, followed by a Government imposed cap on earnings.
"This report rightly draws a link between increased debt and stagnant wage growth at a time when rent and transport costs continue to rise. Many families are having to make choices between paying the rent and feeding their kids."
Peter Tutton, head of policy at StepChange Debt Charity, said: "Every week we see thousands of households struggling to keep up with their essential bills and credit repayments. Sluggish wage growth and the rise in insecure jobs have left households even more financially vulnerable.
"Too many households are relying on credit to get by and this massively increases their chances of falling into severe problem debt."
Oxfam's head of UK programmes, Rachael Orr, said: "Wages are simply not keeping pace with the cost of living, putting an unfair burden on people who are struggling to put food on the table and pay essential bills.
"The Government needs to ensure that employers offer decent jobs that pay enough to live on, and tackle inequality that has seen the incomes of the poorest stagnate while those of the richest continue to spiral."
A Government spokesman said: "Since 2010 the UK employment rate has grown more than any other G7 country and more people than ever before have the security of a job and regular pay packet.
"Living standards have reached their highest ever level and for almost two years wages have risen faster than prices.
"Thanks to changes in the personal allowance, we have taken millions of the lowest paid out of paying income tax and workers will also feel the benefits of the new National Living Wage, which has already boosted pay for over a million people since it came into force this April."