Credit card spending on the up in 2007

Credit card spending is set to increase by 68 per cent in the first three months of 2007, compared to the same period last year, according to new research from the Morgan Stanley Card Index.

Britons plan to spend an average of £1,228 on their plastic over the first quarter of 2007, compared to £730 in the first three months of 2006.

According to the findings, this increase is fuelled by cardholders’ increased comfort using their plastic for everyday spending, with 59 per cent of credit card expenditure set to be on essentials such as groceries and petrol. With repayment figures at their highest level recorded since 1998, the results show a trend for Britons using their credit cards as a money management tool.

The main area of credit card spending in the new year will be on the home and car (£377), closely followed by groceries (£341), together accounting for over half (59%) of planned expenditure. Holidays and travel (£285) are also set to be a major area of spending over the first quarter as cardholders book their 2007 breaks. Brits will be going out rather than staying in between January and March as spend on socialising is predicted to be £103, almost three times the amount that will be spent on home entertainment (£36).

Men are leading the way when it comes to spending in the first three months of 2007, shelling out a third more than women (£1,393 compared to £1,065). Men outspend women on five of the six areas of spend, with women only slightly outdoing their male counterparts on clothing (£88 vs. £85).

Patrick Muir, marketing director, the Morgan Stanley Credit Card, comments: “The results of our research show an increased confidence in the use of credit cards as a financial aid. 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 reward 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.”

The Morgan Stanley Card Index, which is the only study to look at predictions on card spending, asked a GB representative sample of 2,000 adults how much they intend to spend on a variety of items between January and March 2007.

Credit card spending by those aged between 30 and 50 and the over 50s will be fairly equal between January and March (£1,369 and £1,344). Those under 30 will spend less than half these amounts (£597).

The biggest area of spend for the over 50s will be on the home and car (£457), while those aged between 30 and 50 will put almost a third of their credit card spending towards groceries (£414).

Londoners will spend more than any other region in the new year, putting £1,427 on their plastic, while Scots will spend the least (£957). Holidays will be the top spend for Londoners over the first three months, forking out £439 while people in the North will spend the least on trips (£192).

Those in the South of England will spend the most on the home and car (£423) during the first three months of the year while groceries top the list for people in the Midlands and Wales (£415).

Northerners will spend the least on socialising between January and March (£71), whilst those in London will spend the most (£145).