Britons put Christmas on the plastic in 2007, with a record amount of £32 billion spent on credit and debit cards in December alone, but the proportion of this for which credit cards are accountable has dropped as consumers heed the credit squeeze, and debit card use grew 6.8 per cent to £20.9 billion.

According to figures from the Association of Payment Clearing Services (APACS), purchases on credit cards have fallen in December for the third consecutive year, totalling £11.5 billion in 2005, £11.4 billion in 2006, and £11.3 billion in 2007. There were 192 million credit card transactions in December 2007, 2.8 per cent less than in the same month the previous year.

Overall, however, plastic use was up 3.2 per cent last Christmas, compared to December 2006, with 690 million credit and debit card transactions being made in December 2007, equating to 263 swipes per second, £5.4 billion of which was spent online.

Sandra Quinn, director of communications at APACS, said: “Despite talk of a slowdown, once again we spent record amounts last Christmas but it appears that the rapid pace of growth in our festive spending is starting to slow. The increase on 2006 spending was just 4 per cent which compares to increases of just under 9% over the last couple of years.

“This trend highlights what we have been seeing over the past few years with people increasingly opting to use their debit card rather than credit card; reflecting that people are thinking more carefully about whether they can afford to borrow.”

However, as the credit crunch takes its toll, and the cost of food and energy rises, debt experts are seeing warning lights go on over those individuals which are using their credit cards not only for Christmas and luxury items, but for essential items and everyday bills such as food, which illustrates that people are having to turn to credit in order to live.

Those who have been playing the credit card market for the last several years by continuously switching to zero per cent deals are finding that the credit well is drying up as lenders tighten their own purse strings and cancel many of the incentives which were used to entice customers in the first place. Some borrowers are now finding themselves trapped on expensive rates with nowhere to go.

© Fair Investment Company Ltd