Cards to help beat the squeeze; Jeremy Gates looks at the nation's money issues and reports on some of the best credit card offers as Barclaycard marks 45 years since the launch of the flexible friend.
It is 45 years since Barclaycard launched the first credit card in Britain - a month before England won the World Cup - and with a million customers in the first year, the concept soon transformed the way we pay bills.
It was actually 38 years - in 2004 - before spending on plastic cards overtook cash. Barclaycard accounts today for more than 11 million of the 55 million credit cards held in the UK; more than 32,700 transactions an hour are made on Barclay cards.
Last year, credit cards accounted for two billion transactions worth pounds 165 billion, with around pounds 47.2 billion of that total, some 717 million card transactions, processed online.
Barclaycard has recently pioneered contactless mobile payments, in partnership with Orange.
For millions, credit cards are a success - some 211 of a total of just more than 250 are free, and latest figures show 61 per cent of card users pay off their balance in full every month to avoid interest charges, up from 55 per cent in 2005.
But cards bring problems too. Many who don't clear their account each month have debts of four and five figures, and will be seriously in debt for years. We owe pounds 58 billion on credit cards, so the interest bill runs into millions.
Solicitor Daniella Lipszyc, at Ultimate Law, said: "Cards are sold on commission by staff quite unconcerned about how the customer will handle the card they buy. Two or three years ago, cards were being thrown at people with nought per cent APRs for 18 months. Now, in a different world, many are struggling with debts.
"Spending limits on cards of, say, pounds 5,000 or pounds 6,000 are handed out far more generously than personal loans - though they amount to the same thing - and companies are amazingly aggressive when even a first repayment is missed."
Ms Lipszyc also claims card companies fail to tell consumers their rights. "When a provider increases your rate," she said, "you can reject the rise and if you do not use the card again, the provider cannot increase the rate. Companies often won't tell you this."
Low earners can pay dearly for credit cards too. Vanquis Bank, for example, accepts applicants earning a minimum pounds 4,000 a year, but charges 39.9 per cent on outstanding balances on its Visa card and 49.94 per cent on cash advances.
For cardholders in debt, the surge in the number of cards which offer interestfree balance transfers - up by 162 per cent since 2009 - offers a glimmer of hope.
Michelle Slade, at Moneyfacts.co.uk, said: "Card providers are going head to head to lure customers from rivals. Customers with pounds 3,000 on a card (APR 18.8 per cent), and paying the monthly minimum, accrue pounds 764 in interest charges over 20 months.
"By switching to an interest-free deal, customers could put this money towards reducing their debt."
Barclaycard's Platinum Extended Balance Transfer Visa has the longest interest-free period on balances at 20 months with a 3.20 per cent transfer fee when the debt is switched.
If customers need longer to repay, Ms Slade tips MBNA Europe Bank as a best buy: its Rate for Life charges only 5.9 per cent until the balance is paid off.
"However, customers opting for balance transfers should always refrain from spending on their new card as this limits the benefit of the interest-free deal," Ms Slade said.
"Providers may allow new purchases the nought per cent rate for up to three months before they are bumped into APRs which can be quite high."
David Black, at financial data agency Defaqto, sets these basic rules for users: * If you have a good credit rating, change your credit card regularly: the best deals are usually for new customers.
Have more than one credit card and use each for its best feature (one for nought per cent purchases, one for nought per cent balance transfers, one for overseas, one for cashback).
* If you don't pay the entire balance every month, the interest rate element of a card is more important than any rewards.
If you can't pay off an outstanding balance, repay as much as possible. Repay the minimum, and it can take years to clear the balance.
Getting credit can be difficult without a credit history. So get one of the cards available for people in this position, and make limited use of it, clearing the balance every month. Showing that you can handle credit responsibly and are able to make repayments will help future credit applications, including getting a mortgage.
* Remember that if you borrow money you must pay it back. Be disciplined in and avoid a substantial debt.
* Although many cards currently offer nought per cent introductory deals on purchases or balance transfers, don't assume this will always be the case. And don't assume you can roll outstanding debts to another nought per cent deal when your current nought per cent deal ends.
* Avoid using your credit card to withdraw cash - it's too expensive. Most cards charge a fee for cash withdrawals (typically three per cent).
Mr Black said the longest nought per cent introductory rate for purchases (15 months) is available from M&S and Tesco Clubcard, while the longest nought per cent introductory offers on balance transfers (19-20 months) are from Barclaycard Platinum, Virgin and MBNA Platinum Visa.
The best overseas purchases cards, which levy no commission, include Halifax Clarity, Metro Bank Personal Credit, Nationwide BS (until July 31), Post Office, Saga Platinum (for 50-plus market), Sainsbury's Gold (pounds 5 monthly fee) and Santander Zero (available if a customer's main account with Santander has at least pounds 1,000 paid in each month).
Meanwhile, cards with 'frills' can be worth it, said Andrew Hagger, at Moneynet.
co.uk, who tips Sainsbury's Bank Gold, despite its monthly charge. It includes very comprehensive multi-trip insurance cover (including winter sports) for two adults up to 65 and up to six children under 16, and makes no charges for overseas transactions or cash advances.
Barclaycard was first to introduce credit cards in the UK - now homeowners must be careful about the right choice