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February 5, 2009

Britons rely on credit for everyday purchases

by Gill Montia

Story link: Britons rely on credit for everyday purchases

New research reveals the extent to which Britons depend on credit to meet their day-to-day living costs.

According to the latest Consumer Credit Report by Post Office Credit Cards, up to 10.3 million UK adults (or 32% of the adult population) are expecting to use plastic to pay for daily purchases during the early part of this year.

The study also indicates that around 2.6 million people intend spending more on their credit cards than this time last year, with the average person making purchases of £318 during January.

Around 4.1 million consumers are hoping to spend less on each credit card purchase but still expect to use their cards more frequently for general living costs throughout 2009.

The trend is spread across a range of consumers, with no particular social group highlighted by the research.

Finally, 45% of respondents said they were not planning to pay off their credit card balances in full each month, leading the Post Office to recommend a thorough examination of the market to find the best possible deal.

Credit card companies were under pressure from government ministers last year, when the average rate stood at 17.6%, according to Defaqto.

New measures introduced since then mean that customers in financial difficulties now have a period of 60 days grace and that credit card companies will allow borrowers to transfer deals and to freeze accounts at existing rates.

Providers have also agreed not to raise rates if borrowers can show they are working to solve repayment problems with a debt advice group, or already have a payment plan in place.

 

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