35% of Brits using credit cards for essentials in January

Over one-third of Britons with credit cards will use them to get by in January.

The sixth annual Post Office Consumer Credit Report highlights the drastic situation that many people are finding themselves in, as they are being forced to use credit to pay for daily essentials.

Credit card spending

When adults in the UK were asked what they would use their credit card to buy in the first month of 2013, grocery shopping (42 per cent) came out on top of the list, followed by day-to-day purchases (35 per cent).

The expense associated with Christmas – coupled with the stretch on household budgets – means that many people are struggling to make ends meet. Some eight per cent also said they will be using their plastic more often over the next 12 months, as the reality of their economic situation continues to bite.

However, despite the straitened times, many people are still not demonstrating a responsible attitude to their money. Just under one-third (30 per cent) of those questioned admitted using their credit card to buy something in the January sales, while 25 per cent have booked a holiday and 16 per cent have made a major household purchase, such as a kitchen or a new sofa.

If people are struggling to make ends meet, then they should avoid making unnecessary purchases until they are in a situation whereby they can afford it. Across the UK, people in London (18 per cent) were found to be the most likely to resort to credit cards in the first four weeks of the year, while those in the north-west were the least likely (five per cent).

Expert's view

John Willcock, head of credit cards at the Post Office, said: "While many people intend to manage their credit card purchases and repayments sensibly, there are still too many people who are not thinking of the consequences of their festive spending.

"It is surprising to see so many people forced to rely on their plastic for daily essentials this month. The new year is the ideal time to think about financial planning and organising a household budget. I urge people to check their interest charges and consider switching to a deal with a zero per cent offer on purchases and balance transfers."

Managing debt

Individuals who have unsecured debts accumulating have to be proactive if they want to bring the situation under control. They should look for a way to consolidate debts and reduce their monthly outgoings.

One option they could consider is a debt management plan (DMP), as it gives people the chance to negotiate better repayment terms than they currently have. In order to qualify, consumers need to have debt above £1,500 to more than one creditor.

Among the benefits associated with a DMP are that the arrangement is informal, unlike an individual voluntary arrangement or bankruptcy, it can suspend any County Court Judgements and creditors will usually be willing to freeze interest payments.

By James Francis