Warning over use of credit cards to pay for essentials

THE average consumer will struggle to make ends meet in 2012 due to reckless credit card spending, according to a new study by Skipton Building Society.

Skipton said people used their credit card some 267 times last year, spending an average of £17,000 each.

The biggest expenditure in 2011 was on food and petrol, with an average yearly spend of £5,000.

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The study showed that people are turning to credit cards to cope with essential costs such as rent, medical expenses and transport.

In addition to essentials, once a month people stocked up on alcohol, or took trips to the coffee shop, spending a total of £491.76.

Holidays were another popular expenditure with consumers putting an average £1,392.26 of holiday expenses on their card. Skipton said that for some people, this was the only way they could afford their annual break.

Credit cards were used an average 14 times during the last year for nights out with friends and family with an average spend of £761.08 over the year.

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Tracy Fletcher, head of corporate communications at Skipton, said: “Credit cards can be useful if managed correctly, but this research indicates how easy it is for people to get into the habit of using their cards to pay for things they want. They are living beyond their means in order to get things now rather than saving up for them instead.”

Some purchases made during 2011 were not avoidable. The research showed that when hit with an unexpected bill, some people had no choice but to put it on the plastic.

Car expenses such as replacing parts and dealing with breakdowns incurred costs of £703.41 over the last 12 months.

Unforeseen medical expenses meant a further 10 uses of the card as people paid up to £418.17 in dental fees, healthcare and medicines for the family.

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Getting to work proved too costly for some people, who resorted to credit cards to pay for public transport at least once a month, spending £512.01 over the year.

More frivolous purchases included £874.44 on clothes and £526.83 on shoes.

The report indicated that a quarter of British adults rely on their credit cards for everyday living and many think nothing of using the card to pay for items such as food, petrol and car repairs.

Going into 2012, the average person estimates they have £2,271.50 outstanding on their credit card, but nearly half of those polled were not worried by this figure.

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Skipton said that reliance on credit cards is growing, with a third of respondents admitting they used them more in 2011 than any other year so far.

Ms Fletcher said: “Instead of planning ahead for purchases, people are making more and more everyday purchases on their plastic, but with the convenience of instant credit, comes a crippling interest rate if you don’t meet repayments.”

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