Brits to increase spending on their credit cards

According to new figures released by Morgan Stanley, Brits are set to increase the amount they spend on their credit cards by a massive 68 percent in the first three months of 2007, when compared with the same period last year.

A glut of interest-free and cheap credit card deals is expected to see a decline in the use of debit cards in the UK and a re-emergence among Brits in the use of credit cards. On average, Brits are expected to charge £1,228 per person to their credit cards in the first three months of 2007 - £500 per person more than we charged during the same period last year!

Encouragingly, however, credit card repayments are also at their highest levels since 1998. 95.3 percent of all credit cardholders in the UK will make repayments during the same three month period.

A combination of a surge in credit card spending and also in credit card repayments has lead many to believe that Brits have finally managed to master the knack of using credit cards in their daily lives and in their financial planning.

Patrick Muir of Morgan Stanley said, "It is encouraging to see that people are using their credit cards sensibly, with credit card spending and repayment figures increasing in tandem. Cardholders are becoming increasingly clever when it comes to being rewarded for the purchases they make, and with a wide variety of rewards schemes available, ranging from collecting points to cash-back, spending on credit cards is fast becoming the most appealing way to pay when compared to other methods."

In related news, Moneyextra.com is warning consumers to look carefully at the terms and conditions when applying for any of the zero percent credit card deals currently available in the UK as the period of the zero percent deal is often short, after which the interest rate reverts back to the credit card provider’s standard rate – which in many cases is higher than the standard rates being offered by credit card providers who do not have zero percent deals.

In this regard, Eddie Nott, deputy chief executive of Marks & Spencer Money, recently suggested that many UK credit cardholders could be better off staying with a credit card provider that offered low lifetime rates unless they were able to repay the outstanding debt on their credit card within the period of the zero percent offer.

As Robin Amlot, senior editor at Moneyextra, says: "It’s now more important than ever to do your homework to make sure the plastic in your wallet matches your lifestyle needs and spending pattern."

Here, Morgan Stanley reveal that, on average, typical spending on credit cards in the UK in the first three months of 2007 will be:

- £377 on the home and car
- £341 on essentials such as groceries
- £285 on holidays and travel
- £103 on socializing.

Tom Smith
15th January 2007

More Information:

• How To Manage Your Store Card
  Many major outlets offer store cards. These provide an easy way for consumers to defer payment for purchases. Store cards are promoted over public address systems in shops and by shop assistants at checkouts. So it's no surprise that there are more than 14 million store cards accounts in the UK.
• Tips For A Freeloader Credit Card User
  Before you panic, there was a time when a ‘freeloader’ UK credit card user was considered the perfect customer. Freeloader card users always pay their outstanding credit card debt in full on the statement payment date, never carrying a balance.
• The Future Credit Cards
  When the Franklin National Bank in New York started giving their loan customers cards to buy goods from retailers in 1951, little did they know they had started a revolution in spending. When American Express, a traveller’s cheque company, followed suit with their charge card in 1958, card holders began to enjoy the freedom such cards gave the

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