Credit Cards linked to financial stability

11th December 2010  

According to a new survey just out there’s surprising evidence that people who use credit cards on a regular basis tend to be in better financial health than those who rarely use plastic.

The new YouGov SixthSense report suggests that, rather than using credit cards out of necessity, many people now use them for routine purchases and pay off their balance in full each month.

The report draws conclusions between credit card use and perceived financial stability. Canvassers questioned over 2,000 consumers about their use of credit cards. They found 35% of cardholders used their cards at least once a week. A further 17% of respondents stated they used their credit card two to three times a month, while 24% said they made credit card transactions just once every three months or less.

However, when asked about the overall state of their finances, there were conspicuous differences between different groups of card holders. Researchers saw that regular credit card users tended to be in better financial health than occasional users.

50% of people who used their cards at least once a week claimed to be in good financial health, while a further 40% felt they were neither financially healthy nor in trouble. In contrast, a fifth of low-frequency credit card users said they were in ‘slight’ financial trouble, while a further 20% admitted that they were in serious difficulty and had missed bills and loan payments.

Interestingly the poll also revealed that regular credit card users are inclined to owe less money on their cards than low-frequency users. Cardholders who said they no longer used their cards typically owed £3,437, compared to an average balance of £2,881 for all cardholders.

In summary, the report seems to suggest that far from being linked to financial difficulty and an over- reliance on unsecured borrowing, regular credit card use is actually associated with sound personal financial management.

James McCoy, Research Director of YouGov SixthSense, pointed out that people with healthy finances can afford to use their credit cards as if they were debit cards.

“The card can be used day in, day out for all types of purchases and payments can be made in time without having to incur charges or high interest payments,” he revealed, adding: “This explains the link between high-frequency use and financial stability at a personal level.”

According to another study out this month by High Street Retailer Debenhams, over 80% of women wrap the majority of Christmas gifts for family and friends. Some even have to buy their own gift, and then wrap it and give it to their partner to put under the tree.

When it comes to choosing gifts, men and women shop in very different ways, with most women buying what they know will please family and friends, while most men prefer to buy something from someone’s Christmas list.

Michelle Dowdall from Debenhams said

“In December we see men walking around our stores clutching ‘Wish Lists’ as if they were winning lottery tickets, whereas women are much more adventurous and find inspiration as they go along”.

Debenhams study of a thousand pre-Christmas shoppers also shows that when left to their own devices, men tend to stick to traditional presents, such as perfume, jewellery and lingerie even though many women would prefer homelier items, such as jumpers, coats, and slippers.

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