Brits to rely on credit for day-to-day expenses

Millions of consumers are still reliant on credit for day-to-day living costs in 2009 according to the Post Office Credit Card's latest Consumer Credit Report. The survey reveals over 10 million adults (32 per cent) intend to use their credit card in the first part of the year for daily purchases such as grocery shopping, reflecting the extent to which the credit crunch has impacted on people's finances over the last year.

The research shows that 2.6 million people intend to spend even more on their credit cards than last year, with an average spend in January of £318.

The trend of relying on credit to fund day-to-day spending is not unique to one particular social group and is affecting credit card holders across the UK. Worryingly, the trend looks set to continue, with 4.1 million card holders planning to spend less on each purchase but use their cards more frequently for general living costs throughout the whole of 2009.

With almost half of all credit card holders (45 per cent) not planning to pay off their credit card bills in full each month, the Post Office is urging anyone reliant on credit to ensure they are on the best possible deal to avoid over-paying for money borrowed on credit cards.

This is particularly important given half of workers (47 per cent) in this country are concerned about losing their job. This makes such heavy reliance on debt for basic day-to-day living costs even more of an issue.

Post Office head of lending, Az Alibhai said: "In the current climate, many people have little choice but to rely on their credit cards to fund more expensive purchases. However, what is worrying, is the trend for people to continue to rely on their cards for basic day-to-day purchases, which could be expensive if you only pay off the minimum amount on your credit card each month and have a high rate of interest."

"We recommend that people search the market to find the right deal, especially when you consider that some high street providers are offering credit cards with a 27.9 per cent APR or more. Given the current financial climate people should look to take advantage of any zero per cent features offered by providers, such as on balance transfers or new purchases. By taking time to look for these benefits people can save themselves even more money in the long run."

As well as zero per cent on balance transfers for the first 12 months and zero per cent on purchases, for the first three months Post Office Credit Card offers no overseas commission charges. In addition, it offers an extra zero per cent on new balance transfers for five months on the card holder's first and second anniversary after taking out the card.

Even after the promotional periods, the Post Office credit card still offers a competitive interest rate of 16.9 per cent APR typical variable.

To find out more about the Post Office credit card, visit postoffice.co.uk