Consumers in credit card conundrum

Recent weeks have brought confirmation that both unemployment and insolvency in the UK have continued to rise. The Office for National Statistics revealed that 2.22 million were out of work in the first quarter of the year, while the Insolvency Service found that a record number of people were made bankrupt or entered into individual voluntary arrangements in the same period.

As a result, a range of experts have spoken out about the need to reduce debt - with those facing the possibility that they might be made redundant being advised to reduce what they owe in order to avoid repayment problems. However, life does go on and for many borrowing is an important part of the way they manage their finances. And for some, this means finding the best possible credit card rates.

Statistics released by Apacs - the UK payments association - have indicated that consumers are moving away from this form of finance, perhaps in order to avoid taking on more debt. Over the course of 2008 a total of £126.3 billion was spent on credit cards, compared to £246.8 billion on debit cards.

Commenting on this, director of communications Sandra Quinn observed that the recession has had an impact on the way people view their spending. "People seem to be … moving to debit card rather than credit card, because they are spending what they have rather than what they can borrow," she said.

However, credit cards were used to make two billion purchases last year and Neil Munroe, external affairs director at Equifax, suggested that they continue to play an important role. Rather than ignore them altogether, he noted that Britons are simply taking more care to control their credit card debts - something a credit card comparison and transfer may facilitate.

Mr Munroe pointed to the fact that credit card protection is offered to shoppers through Section 75 of the Consumer Credit Act - which makes the card company as liable as the seller if there is a problem with goods. This has become all the more relevant as the risk of firms going bankrupt has increased, as it can allow for a refund to be claimed.

For those who wish to take on this form of finance, finding the best credit card deal is likely to be the first step. Minimising the amount of interest could be key in order to manage debt and therefore a 0% credit card may be the most attractive option.

Indeed, this week Tesco announced that its Clubcard Credit Card interest-free period is being extended from six months to a year. And with credit card rewards in the form of the supermarket's points scheme being available any time it is used, borrowers may well find that it offers some relief for their wallets.

For all your unbiased comparison needs visit Moneyfacts.co.uk