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By Reno Charlton
News Editor, 1 May 2008
Related News & Guides
Personal Finance Weekly News Round Up - 28th April 2008
Over the past week, the financial news headlines have included increased numbers of people turning to consolidation to try and cope with their debts as the cost of living goes up. As well as news on the ruling made in favour to the OFT on unfair bank charges on current accounts, critism over First Plus' latest TV ad, and a report into why lenders should be carrying out more stringent checks on loan applicants.
Limits on credit cards cut for many customers
During a time of 'credit crisis', banks seem to making a lot of movements towards lessening their risk and cutting down on the amount of money they are lending.
Are you feeling the financial squeeze?
Recent research carried out by the Post Office has revealed that four in ten people are using their credit card to cover the cost of day-to-day spending.
Credit crunch results in increased card fees and charges
Credit card users in the UK have started to feel the effects of the credit crunch, as lenders hike up an array of rates and charges as well as rejecting an increasing number of applications.
Many people using their credit cards to make mortgage payments
According to a recent survey many homeowners struggling to meet mortgage repayments have been forced to turn to credit cards in order to make some of these repayments.
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MANY people may have assumed that as the global credit crunch continued to tighten its grip on the UK's financial markets fewer people would be spending on their credit cards.
However, it seems that the credit crunch is having just the opposite effect, with research suggesting that many people have to rely on credit in order to fund their day to day living, as household finances come under more and more strain.
Many consumers are now turning to their credit cards to pay for day-to-day purchases, bills, and in some cases to tide them over for their mortgage repayments.
Rising costs of living
Household finances have come under increasing strain over recent months, with rising bills, food prices, and petrol costs.
On top of this, the abolition of the ten pence tax bracket by the government will undoubtedly put increased pressure on household finances.
Many people are now playing the dangerous game of using their credit cards to tide them over when it comes to purchasing essentials and paying bills, but there is a very real danger that these people will quickly find themselves unable to manage once their credit card funds dries up.
If you have to - do it cheaply
While it's never a good idea to pay for essential items and bills on credit, anyone who is being stretched to these measures from time to time should at least try and make sure they’re spreading the cost on the cheapest credit option possible.
If you know it's going to be a tight year, consider a 0% purchase credit card that now offer 0% periods on new purchases for up to 12 months. While you will have to pay the minimum amount back each month, it will give you chance to get back in control of your outgoings over your income without being charged any interest.
Similarly, people who have already clocked up bills on their credit cards and find themselves in a different position due to increased living costs and managing credit card debt should consider moving to a 0% or low rate for life balance transfer deal.
Lyndsey Burton from Credit Card Comparison Online said: "Credit cards should ideally be used as a form of payment to increase convenience and ease for the consumer."
"However, in the current financial climate many are having to turn to their credit cards to help them to keep on top of their financial commitments. If this is something that has to be done the one thing the consumer can do to reduce the risks is to find a card that is going to save them money on interest and charges."
 Credit card guide
Credit card news archive
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