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Credit cards plug January spending gap

34% relied on credit last month

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A Best Rate credit card can be a cheap and convenient way to borrow

11.5 million people relied on credit cards for everyday spending in January 2011, according to a report from the Post Office – with plastic plugging the financial gap left by excess Christmas spending.

10% of those using their credit cards in January said they needed them to get through the month – which can see employees wait up to six weeks for their salary payments, as some companies chose to pay their staff early in December.

Meanwhile, 11% of participants in the Post Office Consumer Credit Report said they had to use their card to make up a shortfall in their finances after spending too much at Christmas, and 33% of respondents to the survey said they always needed to use credit to get through the month, regardless of the time of year.

Credit cards a big feature in 2011 budgets

According to the Post Office, more than 2.4 million Britons plan to spend more on plastic this year than they did in 2010.

While more than half of the people the Post Office spoke to say they plan to pay off their credit card bills in full each month, 7% of those questioned say it will take them more than three years to entirely clear their credit card debts.

The survey also found that many people have more than one credit card account, with 20% of men owning three or more.

Az Alibhai, head of credit cards at the Post Office, said: ‘January has been a tight month for many of us, especially with the long wait until pay day, and we can see that many people are falling back on credit cards to ease the costs of day to day living. If the debt is managed sensibly and paid off quickly, this can be very effective. However, if you don’t pay off the bill in full, it can be a pricey way to fund daily purchases.’

Best Rate credit cards to suit your needs

Which? Credit cards expert Martyn Saville commented: ‘Credit cards, used cleverly, can earn you cashback and reward points, get you extra consumer protection under the Section 75 rules or assist you in repaying debts more quickly and easily. The key is to find the credit card that suits you perfectly and use it carefully. You can read more on this in our Credit cards reviews.

‘Using your credit card for everyday spending over a prolonged period, however, is a sign that your budget is out of balance – and if you don’t address this issue, you could end up in a downward debt spiral that sees your financial situation spin out of control.

‘If you’re struggling to make ends meet, check out our Dealing with debts guide or consider contacting a free debt advisory service such as the Consumer Credit Counselling Service, National Debtline or Citizens Advice.’

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