Credit cards forcing out cash

The UK has become a nation of credit card users, with 44 per cent of all plastic purchases going on everyday items.

15:05 04 May 2005

The UK has become a nation of credit card users, with 44 per cent of all plastic purchases going on everyday items.

Morgan Stanley attributed this rise in credit card use to changes in the way credit cards are being employed.

With cashback offers, nectar points, Airmiles and zero-per cent deals on purchases in initial months, streetwise consumers are now using cards to make everyday purchases and paying off the balance in full each month to avoid charges.

The Morgan Stanley card index found Britons cleared an average of 78 per cent from their card balances over the first three months of 2005.

"Credit cards have changed enormously over the years and so has the way that people use them. Credit card customers are looking beyond the short term offers and are realising that reward schemes can provide great benefits," said Morgan Stanley's Patrick Muir.

He added: "These savvy spenders are taking advantage of credit card incentives and beginning to use their cards more and more for everyday purchases. With the majority of credit card balances cleared in full every month, Britons are increasingly more likely to shop around and see how they can be rewarded for their spending."