Credit card spending increases in 2007

Britons are spending more on their credit cards, but also paying more off, new research reveals.

The popularity of interest-free credit card deals and cheap credit cards mean that while plastic is more popular than ever, the UK's credit card debt is not increasing.

And credit card spending in the first three months of 2007 is set to be a massive 68 per cent higher than it was in the same period last year, figures from Morgan Stanley reveal.

Spending soared to an average of £1,228 per person, almost £500 more than in the first three months of 2006, but repayments are also higher than at any time since 1998 at 95.3 per cent.

"It is encouraging to see that people are using their credit cards sensibly, with credit card spending and repayment figures increasing in tandem," said Patrick Muir of Morgan Stanley.

"Cardholders are becoming increasingly clever when it comes to being rewarded for the purchases they make, and with a wide variety of reward schemes available, ranging from collecting points to cash back, spending on credit cards is fast becoming the most appealing way to pay when compared to other methods."

Interest-free credit card deals and cashback credit cards are seeing far more spent on essentials such as groceries and petrol than at this time last year (£341 compared with £187).

The largest area of credit card spending in the first three months of 2007 is on the home and car (£377), followed by groceries (£341).

Holidays and travel (£285) also feature highly, with new year detox plans meaning just £103 is spent heading out socialising between January and March.