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To try and stay in the black, consumers are using cash and store cards for their purchases more and more. Department stores such as M&S and Debenhams have seen a surge in cash and store card sales. It's just a bit surprising that the use of credit cards are certainly going down in stores, and there is a strong belief that they are now being utilized for the purpose of settling household expenses like utility bills and rentals.
A GfK NOP poll revealed that consumer confidence slipped lower than it has been since the recession of 1990, largely due to dropping house prices and increasing household expenses. Roughly 2 million British citizens have had their credit card limits lowered during the past six months.
Increased use of credit cards issued by stores signals a troubled economy as they are the most costly means of borrowing money. You might not want to use a merchant’s credit card if you didn’t have to, and there’s a big difference between those who don’t want to pay by cash and others whose budgets are tight and who therefore have to use credit cards even if it means paying interest.
Average store cards carry a rate of 22% and can get as high as 31% This interest rate seems high when you consider the 17% rate on a credit card. A survey conducted during last week shows that about 4 million people use their credit cards to pay out rent or mortgage, availing up to 1 million pounds a year ago. Using credit cards to borrow money to pay loans and mortgage is actually more expensive except for the doorstep and payday loans. The UK is having problems with personal finance.
It doesn't seem like the best decision unless you are faced with losing your home. The first step is to use the help of Citizens Advice, it's important to not miss aid you are readily eligible for. It is perfectly acceptable to use your card when a true emergency exists, as doing this is quite possibly the most effective way to gain time until you are back in charge. It will not hurt when things are this bad Debt on your card is not secured by property but if you don’t pay the rent or mortgage, you could be homeless in a matter of months.
Amy is a freelance journalist writing about financial issues, whilst working on Vanquis Credit Card - Visa on behalf of eComparison.
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