1 in 10 rely on credit cards to make ends meet

Wednesday 25th January 2012

Nearly one in ten Britons admit they are relying on credit cards to make ends meet.

New research has revealed that more than a quarter (26%) of Britons expect to owe money on their credit cards throughout 2012, with nearly one in ten (9%) admitting they are entirely reliant on their plastic.

The survey into the nation's financial concerns for 2012 was commissioned by price comparison site Gocompare.com and revealed that the rising cost of living/bills is the UK's biggest financial worry (22%).

One in four want to find ways to save money on their outgoings in the coming year and 35% would like to get out of debt or reduce their loan and credit card costs.

The survey also asked people to look at their essential outgoings and bills and say where they felt they could make savings in 2012.

Food shopping and transport costs topped the list with gas and electric close behind.

Only 15% of households felt there was nothing they could do to make savings.

Jeremy Cryer, Gocompare.com's head of credit cards, said: "The rising cost of living is placing a strain on many families and credit cards are being used to temporarily ease the pain.

"If used carefully, plastic cards can be a useful budgeting tool, but when used to plug a gap in everyday spending, card debt can quickly spiral out of control.

"Worryingly, our survey revealed that nearly a tenth of people in the UK rely on their credit cards to make ends meet. No wonder we owe a staggering £60billion on credit cards as a nation.   

"It is clear from our research that a huge number of people are already expecting 2012 to be a 'year of debt' so it's important that they take action now, rather than allowing interest to add to their financial burden."    

Tips to help you ditch your debt in 2012

1 The first step to managing your debt is to take control
When your statement arrives, don't ignore it; your debt will increase as interest is added to the outstanding balance.

2 Don't just make the minimum repayment
Card issuers add interest to any outstanding balance so the longer you take to repay the debt, the more money you will owe.  For example, it could take up to 34 years to repay a debt of £5000 if you only make the minimum repayment each month. Also, if you have more than one card, pay off the most expensive card first.

3 Switch your credit card
Transfer your credit card balance to a card with an extended interest free period on balance transfers - these usually charge a small balance transfer fee of around 3% which will initially be added to the debt but is still worth doing if you can get 0% interest for 24 months. Alternatively, if you are unlikely to repay a significant part of your debt during the 0% interest free period, switch to a card with a low interest rate for the lifetime of the balance transferred. This will immediately reduce the interest rate until the debt is paid off.

4 Avoid fees for missed payments and cash
Typically card issuers charge around £12 for missed payments, also avoid using your credit card as a cash card - the additional charges make this an expensive way to borrow money.

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Mike Jones