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Why Do A Third Of Brits Turn To Credit Cards To Cover January Costs?
The Post Office's Consumer Credit Report reveals that 43 percent of people used their credit cards to pay for their groceries, easily the most expensive item in most people's outgoings. Day-to-day reliance on credit cards is viewed by lenders as a key indicator of financial distress. Ten percent of people said that they increased their card usage in January to cover costs until payday. Traditionally, employers pay December monthly salaries earlier to help employees with their Christmas shopping. The downside of this is that salaries may then have to last up to six weeks. However, a third of people surveyed by the Post Office admitted to relying on their plastic to pay for normal outgoings every month. This more worrying behaviour can be partially explained by recent research carried out by insolvency body, R3. It found that nearly 42 percent of Brits couldn't make their wages stretch between paydays. The prime reason many people gave for their cash flow problems was card repayments. R3's President, Steven Law, said that the results highlighted the country's continued over-reliance on credit cards. He advises those that rely on their credit card to make ends meet to seek professional advice rather than hoping the problem will resolve itself. Research from Asda suggests that the days of credit cards are far from numbered. It found that, compared to the same month in 2009, the average UK family's spending power fell by £8 per week during December to £172. Overall, families' disposable income throughout 2010 was £4 a week less than it was in 2009. Just over half of card holders said that they expected their spending in 2011 to be the same as it was in 2010, perhaps not ideal candidates for a credit card comparison. Seven percent however thought that they would spend more. One third of these people thought that 2011 would see an increase of £100 per month. Seventeen percent thought that they would need an extra £200 per month to cover costs. Az Alibhai, the Post Office's head of credit cards, said that it was understandable that people turned to their plastic to fund the financially difficult month of January, even taking out instant decision credit cards to rush applications through. However, he warned those that are veering towards using their cards for day-to-day purchases to exercise caution even when using 0% purchase credit cards, as failure to make payments in full can prove costly. Although more than half of respondents say they plan to pay off their card bill in full every month to ward off interest charges, seven percent say that it will still take them more than three years to clear the debt in its entirety. Article Directory: http://www.articledashboard.com Justin Schamotta is a staff writer for a site that helps users to compare credit cards. The site also hosts full reviews of popular products such as Barclaycard Platinum credit card. |
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