Millions Turn to Credit for High Cost of Living
The high cost of living has forced 11.5 million to turn to credit for daily purchases, new research shows.
Experts warn consumers to take caution when spending in this way for the long term as interest could mount up, accumulating into unmanageable debt.
The Consumer Credit Report by Post Office revealed 34 percent of credit card holders spent January relying on their cards for day-to-day living costs. Forty three percent have used these cards for grocery shopping.
One in ten admitted they used their credit cards to see them through the long gap to the January pay day, and 11 percent said they needed to cover their daily purchases this way due to overspending over Christmas.
“January has been a tight month for many of us, especially with the long wait until pay day,” said Az Alibhai, Post Office head of credit cards.
“We can see that many people are falling back on credit cards to ease the costs of day to day living.”
Worryingly, 32 percent expect to increase their credit card spend by up to £100 extra per month this year to meet the high cost of living, and 17 percent said they would potentially have to add up to £200 monthly.
Almost half the credit card holders expect to spend the same as they did during 2010.
While 56 percent plan to pay off their bill in full each month to avoid interest charges, seven percent estimate it will take them more than three years to entirely clear their credit card debt.
Due to this 39 percent admitted they would need to budget more carefully as a result.
Many people were shown to own more than one credit card – with 20 percent of men having three or more.
If you are relying on your credit card to get through each month, try replacing it with a prepaid credit card, as this does not have an overdraft and the user can only spend the amount they loaded onto the card.
It is a good tool to aid budgeting, prevent overspending, and hopefully put you on the right path to repaying your credit card debt.