People are using credit cards to ‘get by’

Almost half of UK adults are relying on their credit cards to bridge the gap between paydays, according to new research from cashback website Quidco.

Because living expenses are increasing at a faster rate than wages, people are finding it difficult to reach the end of the month. In the survey of 2,000 UK adults, over 66 per cent admitted they are frequently forced to use their credit card to top up their funds as they draw close to their next pay cheque.

On average, pre-payday overspending on credit card stands at £180 per person, with credit card debt amongst UK adults coming in at a worrying £1,600 each.

Unsurprisingly, the research also revealed almost one in seven adults are not living within their means and are falling into debt as a result.

Although 41 per cent blamed this overspending on the increasing cost of living, more than a quarter admit to spending money unnecessarily. 

As daily living expenses become a problem, people are beginning to change their shopping habits in order to make their money stretch further. Some 91 per cent said they now shop around for the best deals before making a purchase, while nearly a quarter find voucher and discount codes before they buy.

Managing director at Quidco Andy Oldham said: "Britons are undoubtedly still feeling the pinch when it comes to money management, as the financial climate fails to improve."

"Credit cards can be a tempting option, but there are other ways to soften the blow when making necessary purchases."

The most worrying thing about people relying on their credit card towards the end of the month is that they can soon rack up large amounts of debt. If an individual is forced to use their credit card every month then it becomes increasingly unlikely they will be able to pay back the money they owe.

Of course, credit card debt can soon spiral out of control thanks to the hefty interest rates they often charge, but another study by Moneywise has revealed many people do not know how much interest they are paying on their card.

The research found 46.5 per cent of credit card users have no idea of the interest rate they have agreed to.

Surprisingly, most people do not see a low rate of interest as an appealing aspect to a credit card, with more people citing rewards as the main reason they pick one up.

Only 14.4 per cent of individuals gave a low rate of interest as the main reason for taking out their card, while 13.6 per cent said a balance transfer offer was their biggest consideration.

Rewards can often be tempting but they can often distract people from looking hard at the small print. If individuals are being forced to use their credit card to get by towards the end of the month they could be racking up large amounts of debt by only making minimum or partial payments when the bill comes in.

For this reason, it is important for people to study the rate they pay on their credit card before their debt begins to spiral out of control.

By James Francis

Find out more about money management on the ClearDebt blog.