Adults owe an average ?1,140 on plastic

Consumers continue to find credit cards "irresistible", with outstanding debt soaring by 62% during the past four years, it was announced today.

According to a report by market analyst Datamonitor, adults in the UK owed an average ?1,140 on credit cards at the end of 2003, up from ?719 in 1999.

At the same time, total outstanding credit card debt reached ?53.5bn at the end of last year, despite the fact that figures released earlier this week by the payment clearing services body, Apacs, showed that people were repaying their credit card debt at a faster rate than they were spending.

The total number of cards in circulation in the UK has risen by 58% since the end of 1999, to nearly 65.5m. Datamonitor said that the strong growth in cards suggested UK consumers were becoming more comfortable with them. The group went on to say that the increase also showed that the market had defied predictions that it would become saturated, although the fact that it remained highly competitive was likely to keep credit card payments affordable.

"This growth in credit card debt will only be of concern if consumers become unable to pay it back," said Kieran Hines, author of the report. "The competitiveness of the credit card market will continue to provide consumers with low-rate balance transfer options and competitive standard rates, and this will allow the financially aware to keep their interest payments low."

He did concede, however, that any sudden increase in the Bank of England's base rate would put pressure on mortgage repayments and could have a knock-on effect on consumers' ability to meet their credit card payments.

Despite the high levels of debt people have already accumulated, Datamonitor expects the use of credit cards to continue to grow, and forecasts that by 2008 there will be nearly 91m credit cards in circulation, with the value of total transactions soaring by more than 42% to ?157bn.

It added that multiple card holdings and so-called rate tarts, who use their credit card as a free, short-term borrowing facility, were contributing to the rise in the number of cards being issued, and by 2008 there would be nearly two credit cards in circulation for every adult in the UK.