A nation in hock

Britons are credit card crazy, according to new figures. Hardly surprising, as today the plastic fantastic can be used to pay for even the smallest items.

A decade ago, credit cards were mostly used for big-ticket items and debit cards barely made a dent on our bank accounts.

Plastic fantastic

Almost 120m cards issued in the UK

85% of adults have one or more cards

Used for 3.4bn purchases in 1999

But today, we use cards to pay for items as cheap as a 90p Tube fare.

During December last year, Britons ran up £17.5bn on credit and debit cards.

That's more than any other country in the European Union, according to the Credit Card Research Group (CCRG).

So how have our spending habits changed in the past decade?

Cashless society

It's not that we're spending more, we're just using different methods of payment, says a CCRG spokesman.

Once upon a time, hitting the shops required a wallet, a chequebook and a cheque guarantee card.

No change for a ticket? Doesn't matter anymore

Now cash and cheque payments have been all but superseded by plastic cards.

Even Marks and Spencer - which is trying to shake its fuddy-duddy image once and for all - finally agreed to accept credit cards last year.

The attendant at the corner shop may still look askance if you pull out a card to pay for a pint of milk and a newspaper, but that is set to change.

Smart cards, which store account information on a microchip, are expected to be widely used by 2003. And the corner shop is increasingly likely to install an in-store cash machine, according to the Association for Payment Clearing Services.

What we buy

Shoppers a decade ago tended to save their credit cards for expensive items, such as stereos and televisions.

"Phew, no travellers' cheques to pack"

Today, credit cards are often used on a weekly basis, to buy groceries and pay restaurant bills.

And a recent survey by Which? found that using a card to withdraw money abroad was generally cheaper than using a bank or bureau de change, let alone travellers' cheques.

The CCRG spokesman says online shopping is booming - yet just two years ago, few Britons used their cards on the internet.

"Travel and entertainment are the main areas, along with electronic goods. But more people are buying groceries and clothing online - these had not previously been popular with internet shoppers."

Who will buy?

Those issued with credit cards in the early 1990s tended to fit a narrow profile. The majority were upper- or middle-class, often male, and typically earning more than £30,000 a year.

But just try and buy a newspaper with it

A decade on, almost anyone whose credit rating passes muster can apply for a card.

And debit cards are no longer a perk offered to a select few - banks and building societies issue the cards to most account-holders as a matter of course.

Even those with a poor credit rating can apply for a debit card which has to be authorised electronically before a transaction can be approved.

Since the cardholder cannot go into overdraft without permission, these are also issued to people opening their first bank accounts.

Crowded market

More and more moneylenders are clamouring for our business. As a result, interest rates have come down and customers are offered incentives to use their cards.

Aware that few people go to the bother of changing banks or ditching their credit card provider, some card-issuers offer cheap rates on debts transferred from a competitor.

Other sweeteners include a percentage of cash back once a year, and points which can be redeemed against utility bills or purchases.

But no matter what you spend and where you spend it, one thing is for sure - that wallet in your pocket may soon be replaced by an e-purse.