Credit Card News Brits Favour Credit Cards For Small Purchases But Leave Buy Now Pay Later Culture Behind For Christmas 2697

Brits favour credit cards for small purchases but leave ‘buy now pay later’ culture behind for Christmas

29 December 2008 / by Rachael Stiles
The ‘buy now pay later’ culture is becoming a thing of the past thanks to the credit crunch, as consumers realise the risks of putting everything on credit and being unable to foot the bill if circumstances change, but they favour plastic over cash for every-day purchases.

According to research from Sainsbury’s, 7.55 million Britons use their credit card more than cash for day-to-day spending on inexpensive items of £20 of less, using their credit card as they would a debit card or cash, but Halifax says that big spenders are shunning plastic for cash at Christmas.

The every-day credit card spenders are racking up a total £3.64billion spend on their credit cards every month, an average of £483 for the average cardholder, but some are spending £750 or more each month.

Sainsbury’s has found that about half of these card users are wasting the opportunity to be earning rewards on their credit card spending, with as many as 12 million people missing out on valuable rewards.

Therefore, about £1.76billion worth of credit card spending going unrewarded each month, the research revealed, when they could be reaping the benefits of cashback credit cards.

“Although we’d never advocate people using their credit cards for everyday inexpensive purchases if they are likely to incur interest, we’ve identified a number of people who clearly like to use their credit card in the same way as they would cash or debit cards and who pay off their balances each month.” Donald MacLeod, head of Sainsbury’s credit cards.

“Unfortunately, recent research reveals that one in two credit card users do not see any financial benefit as their cards don’t offer any financial rewards. In truth, there are fewer credit cards offering any form of financial reward linked to the amount of money spent on the card today, compared with four years ago, meaning there’s no better time to switch to a card that gives you something back.”

Meanwhile, Halifax has found that consumers are no longer living the ‘buy now pay later’ lifestyle that they once were, and are changing their spending habits in line with the moving economy when it comes to the cost of Christmas.

After examining Brits’ shifting spending habits, Halifax found that 71 per cent of consumers will be paying for Christmas in cash this year, with a third using their credit card and one in 10 will use a store card. Only five per cent will take out a loan to pay for Christmas spending.

Brits are cutting back this year in light of economic difficulties, with 39 per cent saying that they are spending less this Christmas as a result of the credit crunch, and almost a quarter started their Christmas shopping early and started saving for it earlier in the year to try and spread the cost.

“It’s encouraging to see that more consumers are becoming prudent with their finances this year by choosing to use their savings, monthly income and cash to pay for their Christmas purchases, rather than opting for costly store cards which could see them paying out more in the long run.” said Mike Regnier, head of banking at Halifax.

© Fair Investment Company Ltd

Written by Editorial Team