People prefer plastic to cash, even for basics |
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Sat, 07 May 2005 07:20
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The nation seems to be going the credit card way, as survey revealed that people had taken to credit cards so much so that even regular household goods were bought through plastic.
The Morgan Stanley research showed an upturn in credit card usage as even daily items like groceries and petrol had secured place in credit card bills. In fact, about 44% of card payments now constituted of everyday items, which were formerly paid by cash.
| The Stanley group attributed the recent rise in card usage to the transforming credit card industry that was continuously modifying and adapting its structure to suit customers’ interests. Marketing director, Morgan Stanley credit cards, Patrick Muir said, “Credit cards have changed enormously over the years and so has the way that people use them.” He added that as credit card companies were increasingly offering rewards and various benefits to its customers, people were comfortably turning towards the plastic payment trend.
The good news is that people were found repaying their debts more promptly, alongside their increased spending on credit cards. The first quarter of 2005 saw people paying off an impressive 78% of their credit card debt. Furthermore, the second quarter is expected to see an at least 10% more credit card spending, with £803 worth credit card payments.
Growth in credit card usage has also been powered by people who wield the credit card during holidays. About £247 on travel could be spent by people in the second quarter, higher than the first quarter figure of £182. While £169 will be dedicated to their house and car, around £182 will be used for groceries. Moreover, as much as £95 of the entire card spending will be used to socialise, with £87 spent on personal items like apparels, footwear and beautification.
Nevertheless, an independent study by Alliance & Leicester has a different tale to tell. To be published today, the research will disclose how consumers were not being able to make any savings each month even though their disposable incomes had taken a 28% leap last year. The second quarter had people anticipating for only £88 savings per month, just about the amount in 2004.
In addition, the research will warn people against outstanding bills at the end of June that could total to £375, a rise from £294 last year.
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