The credit card is 50 years old – but is it a flexible friend or just a way of saddling spenders with extra debt that they cannot afford?
The first UK credit card was issued by Barclays Bank on June 29, 1966 – the Barclaycard was drawn up along the lines of cards already available in the US.
Six years later, NatWest, Midland Bank, Lloyds and Royal Bank of Scotland joined forces to introduce the rival Access card.
The cards allow borrowers to spend money they have not got and then to pay off the debt in regular monthly payments with interest charged on the outstanding debt.
New research from comparison web site MoneySuperMarket reveals the credit card to be a life saver and a ball and chain for borrowers at the same time.
Struggling with debt
Close to 19 million British credit card holders (37%) have wrestled with debt for up to four years.
Researchers found 70% of British adults have a card, with half that number having more than one.
Nearly two-thirds of adults (61%) owe money on a credit card, while the total credit card debt in the UK amounted to £64.4 billion in April 2016.
Spenders buy something on a credit card 100 times every second.
The average interest rate in February 2016 hit an all-time high of 21.6%.
The average debt is £891, although the under 35s tend to owe more – an average £1,215.
Spenders who can’t pay what they owe
The debt sits on a card for between 24 and 37 months.
While 62% clear their balance each month, the rest do not, with just 28% paying off more than the minimum payment, 8% pay the minimum amount and 2% confess they doubt they will ever pay off their card debts.
The firm’s Kevin Mountford said: “We’ve come a long way since the first credit card was created 50 years ago – now there is a huge variety of products to suit different types of spending, and consumers have been able to benefit from increasing rivalry between providers.
The balance transfer card market has been extremely competitive with providers increasing the duration of the fee free period, and cutting fees.”