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Credit card warning for Brits

Tue, 26 Sep 2006

UK residents have been warned that relying on a credit card may not be the most cost-effective way of managing their debts and making purchases.

Earlier this year, research from Morgan Stanley Credit Card revealed that more UK consumers are using credit cards for everyday shopping, such as groceries and toiletries.

However, consumer advice company Moneyfacts has now claimed that high interest rates and withdrawal fees may mean that credit cards are an expensive option for many consumers.

Furthermore, 26 credit card providers have raised the charges for cash withdrawals since July, while 19 have raised the interest rate in the same period.

Lisa Taylor, an analyst at the company, remarked: "With many people’s finances on a knife-edge, it may be that more and more people are relying on credit card cash withdrawals to make ends meet."

She added that credit card providers may have "cottoned on" to this trend, raising the cost of withdrawal fees accordingly.

Ms Taylor also offered advice to consumers on effective credit card management: "If you are able to make payments, even slightly above the minimum required, you may be surprised at the effect this has on your outstanding debt."


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