The amount spent on credit cards increased in August, fuelling concern that consumers may be overspending and leaving themselves open to credit card debt.
According to the Barclaycard Spending Index, 9.2 per cent more money was spent on credit cards in August compared with the same period 12 months ago, representing a fourth consecutive month of spending growth – a trend echoed right across the credit industry, according to Barclays.
The increase suggests consumers continue to be confident about the economy – an outlook which free debt solution providers warn should be tempered with a little caution.
“Spending figures from the Office for National Statistics also show spending was up in August compared with the previous year,” confirms John Fairhurst, managing director at national free debt advisor Payplan. “Confidence appears to be high and we watch with interest what September’s figures will bring.”
Payplan is one of the oldest free debt solutions companies in the UK and assists thousands of consumers with money problems including credit card debt every month. John Fairhurst warns: “We would be the last to pour cold water on a High Street spending recovery but as a responsible advisor, we warn people to be realistic about their finances, the wider economy, and the possible impact this may have in the coming months.”
Public sector cuts, due to be announced on October 20, could directly impact on more than one in five of the UK population who are currently employed in the sector, while many more in jobs linked to local authority work could be indirectly affected. Coupled with this is the inevitable Christmas spend.
“We give the same free advice as the Citizens Advice Bureau and National Debtline – use credit cards wisely when there is money in the account to cover the spend,” adds John Fairhurst. “Our trained consultants receive calls and inquiries on a daily basis from people asking about credit card debt loan or credit card debt help where they’ve spent beyond their means and there seems no way back.”
Positve evidence of a more realistic approach to credit card use came in the recently published Mintel financial intelligence report which looked at the change in consumers’ attitude to debt in light of the recession. The report says only 27 per cent of people interviewed had a credit card with an outstanding balance while 49 per cent said the recession has made them more careful when it comes to credit card spending and 19 per cent said they definitely use their credit card less now than before the downturn.
For free and impartial advice on how to pay credit card debt contact one of the following: Payplan: http://www.payplan.com - 0800 280 2816; the Citizens Advice Bureau: http://www.citizensadvice.org.uk/getadvice.htm - to find your local CAB branch; or the National Debtline: http://www.nationaldebtline.co.uk/ - 0808 808 4000.
Note for editors
The Barclaycard Spending Index is based upon credit and debit card transactions processed by Barclaycard Global Payment Acceptance, which processes around 30% of all payments in the UK. More details available at: http://www.newsroom.barclays.com/content/Detail.aspx?ReleaseID=1812&NewsAreaID=2
The Mintel study interviewed 1,937 adults in April this year. The study covered household debt, changing economic environments, the mortgage market, consumer credit, money management and the impact of the recession and was published in July.
Payplan was established in 1993 and is one of the UK’s leading providers of free debt solutions. Its award-winning service helps over 100,000 people in financial difficulties every year. With no fees to pay, it is a first choice for people wanting help with budgeting, loans and credit card bills, repossessions and mortgage arrears.