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by: Amy Whittingham
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Word Count: 392

To stay out of the red, buyers are paying with cash and using store cards more often than they did before. Retail establishments such as M&S and Debenhams have reported more cash and store card purchases. There is a decreased use in credit card spending in stores, mainly, it is is believed, because shoppers are now having to resort to using them to pay for basic household expenditures, such as utilities and mortgage or rent.

With house prices dipping and household expenses on the rise, a GfK NOP poll indicated that consumer confidence had declined to a low that hasn't been seen since the 1990 recession. Roughly 2 million British citizens have had their credit card limits lowered during the past six months.

Store credit cards charge some of the highest interest rates, so we can conclude that consumers are hurting financially when their usage of them increases. Everyone has their own ideas about borrowing, but whether you are a cautious cash-only spender or you don't mind resorting to using credit cards, you should still be wary of using a store credit card unless it is a last resort due to high cost of interest associated with them.

Store cards have an average interest rate of 22 percent and can have rates of up to 31 percent. This is particularly high when compared to the 17 per cent that is usually charged by credit cards. According to a poll conducted last week, approximately four million people pay their rent or mortgage with a credit card, which availed up to one million pounds last year. Paying on a loan or mortgage with a credit card is very expensive, but not as much as a payday loan. This is a bad sign of what is happening in household finances activities in UK.

It doesn't seem like the best decision unless you are faced with losing your home. First, seek the guidance of Citizens Advice, you don’t want to miss aid that you are eligible for. Don't feel bad if you have to use your card in case of an emergency because it might allow you some time to regain control. It will not hurt when things are this bad Credit card debt in not secured by property, but if the rent or mortgage isn't paid, you'll find yourself with nowhere to live in only a few months.

About the Author

Amy is a occassional columnist commentating financial issues, whilst working on Vanquis Credit Card - Visa for eComparison.

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