3/5 of Brits put petrol on their credit cards

By UK CreditCards.com

A significant proportion of Britons are using their credit cards to pay for petrol, according to new research by credit information provider Equifax. The company's study highlights the convenience of paying with plastic, but also reveals that many are failing to pay off their credit card balances in full each month.

gas-gauge

Experts say that this latest finding suggests that, rather than doing so out of choice, many Britons are borrowing out of necessity in order to fill up their cars.

Credit cards commonly used at the pump
Equifax found that 91% of respondents had at least one credit card and that 58% of cardholders were using their credit card to pay for petrol. The company's poll of 2,380 customers revealed that those based in Wales were most likely to rely on their credit cards at the petrol pump (68.2%), while those living in London were least likely to use their credit cards for this purpose (43.4%).

Practice could prove costly
Neil Munroe, external affairs director at Equifax, says that credit card use at petrol stations is "not surprising," as many people do not carry enough cash around to pay for a tank of fuel. However, he is concerned at the company's observation that many people fail to pay off their credit card balances on a monthly basis. The survey found that half of respondents were not paying off their balance in full every month, with nearly a third managing to repay less than 25% each time.

"What this means is they're paying a lot more for their fuel than just the £1.36 or so per litre -- and more for diesel," notes Mr Munroe. "Indeed, with one in five saying they believe it will take them more than a year to pay off their credit card debt in full, the interest accrued will be quite considerable."

0% purchase card could (temporarily) ease the pain, say experts
One way to ensure the cost of petrol is not boosted by additional interest could be to take out a credit card that offers 0% on purchases for a limited period. While this is not a long-term solution, a 0% purchase card would give motorists extra time to pay off their card balance before it starts to accrue interest. However, Mr Munroe warns, "If a person does decide to take out a credit card with an interest-free period, they should make sure the debt taken on during that period is manageable, as it can easily spiral out of control."

See related: Cardholders advised to plan for a rise in interest rates; Do credit cards foster financial stability? 

Published: 13 April 2011