Friday 16th May 2008
Households may find credit cards a short-term solution to cashflow problems, but they should not rely on them for too long, it has been claimed.
Chris Tapp, director of financial education charity Credit Action, makes the assertion in light of figures showing the proportion of household income which must be spent on essential costs is increasing.
The figures, published by analyst Capital Economics, reveal that 31 per cent of income now goes on unavoidable expenses - up from 25 per cent six years ago.
Mr Tapp says: "It may be a reasonable option in the short term, but people have to be very careful they don’t find themselves overly reliant on credit."
This, he adds, is "unsustainable in the long run and can lead to people getting in real difficulty".
He notes, however, that the credit crunch may in fact help to prevent Britons from accumulating too much debt.
As lenders are less willing to provide funds at a cheap rate, Mr Tapp argues that Britons could find it more difficult to rely on credit to meet their essential bills.
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