Credit cards Updated:
Despite the UK supposedly being on the road to recovery, consumers are still feeling the pinch with their spending power suffering as a result. The improving economy isn't getting families spending at the tills – rather, the squeeze on pay packets means many could face a difficult Christmas.
According to Asda's income tracker, UK families have less disposable income than they did a year ago which puts a considerable strain on their spending power, largely thanks to inflation running at over twice average earnings.
In fact, Andy Clarke, Asda's chief executive, noted that prices are rising more than three times that of wages, with rising utility and food bills having a particularly detrimental impact on consumer spending. "People are already saying 'we will go to bed early rather than put the heating on'. That really brings it down to earth," he said.
Retailers across the board are noticing the difference, with the key sign surely being that retail sales unexpectedly fell by 0.7% during October.
Morrison's chief executive Dalton Philips echoed wider industry feeling, saying that it's "a reflection of the consumer really tightening up their belt. They spent during this hot summer … then they had to really rein back. The consumer is definitely under pressure as we go towards Christmas".
The fact that families are feeling the pinch means many will undoubtedly turn to credit to fund the festive season. In some cases, doing so can be the affordable choice – choosing credit cards with 0% interest on purchases, for example, or even those with 0% balance transfer deals, means you can spread the cost without accruing additional debt.
Alternatively, opting for a cashback credit card (or even current account) can give you the chance to earn rewards as you shop, meaning you're getting something back from your festive spend.
Spending power may be stalled, but it doesn't mean you have to sacrifice Christmas as a result.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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