May 2, 2007

NEWS: Brits Use Plastic for Big Buys

A major industry expert revealed this past week that Britons are increasingly showing a trend of using their credit cards to make major purchases. Provider Halifax states that UK consumers spent a total of £13.5 billion on new items for their homes in 2005 - compared to £7.3 billion just ten years ago, in 1995. Consumers are using plastic to finance new furniture, but is it really the most prudent way of spending?

Halifax warned that the answer to that question could be “no,” if consumers are not buying them using zero-percent interest offers. In that case, they are just paying too much. A rep for the credit card issuer giant stated that consumers may be prioritizing their desire for “creature comforts” over their prudence in avoiding high balances and skyrocketing interest on their plastic.

Ken Stannard, chief of Halifax, opined that financing big purchases with credit is only ever a good idea if a generous interest-free period is being offered. Even then, be sure to examine the fine print, he says. Lenders love to bury significant details in pages of fine print, such as the fact that the back interest will be piled on to the balance at the end of the promotional term if not fully paid off. Of course, that warning was back-loaded with a plug for Halifax’s interest-free promotional offers. Yet, it’s still good advice to almost anyone.


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