Dreaming of an interest-free Christmas

The number of people applying for interest-free credit cards surged by more than 15.6 per cent in November as cash-strapped shoppers rushed to put Christmas on plastic, new figures from MoneyExpert.com show.

The website saw a 15.6% increase in the number of applications for credit cards offering interest free periods on purchases when compared to the same time last year. And the number of applications last month was 22% higher than in October.

MoneyExpert.com believes the rush to apply shows that people still plan to spend at Christmas taking advantage of the current attractive discounts in the shops but place much of their spending on credit cards offering interest free deals.

And the independent financial comparison website is warning that the interest-free card rush is risking piling on the pressure for borrowers. Its research shows 30% of adults are concerned about their ability to manage their personal debt and that 27% of those owing money have gone further into the red in the last three months. Around 4% - equivalent to nearly 1.8 million people - have increased their debts by more than 20% in just three months.

Sean Gardner, director of MoneyExpert.com, said: "The spending habit hasn't died yet and the price-cutting frenzy on the high street shows that there are plenty of bargains out there with big name stores offering massive reductions.

"It can make financial sense to cash in by taking out interest-free cards and then paying them off. But Christmas tends not to be a time for sensible financial planning and the UK economy has been detached from reality for quite a while now.

"The fear must be that people are having one last turn on the credit card merry-go-round before it comes grinding to a halt."