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More people are looking to zero-interest store cards and catalogue offers to keep spending in the credit crunch, a strategy that will almost certainly see them fall further into debt.

According to the Finance and Leasing association, the amount borrowed through consumer schemes has rocketed by £231m, or 23%, in March 2009 from last year's figures.

It might seem like good financial sense – buy now, pay later. But this just pushes further into unsecured debt, which is never a good thing. On top of that, the rates on these deals may seem great to begin with, but after time you may be hit with huge repayment bills.

Geraldine Kilkelly, head of research and chief economist at the FLA, says: "Overall, consumer finance is still being hit by the downturn. With a depressed housing market many people are choosing to improve their homes and replace furnishings rather than move house. Retailers and lenders have been offering interest-free credit and deferred payment deals on store instalment credit.

"We have seen a similar trend in recent months in the motor market. The proportion of car sales represented by instalment-type credit available in the dealerships has grown from 48% to 54% over the last year. This is mainly a response to competitive pricing and reduced availability of other sources of credit."

Simply, if you do not have the money, don't spend it. Unsecured debt is the worst debt to have – it's expensive, it's hard to pay off and it can severely affect your chances of getting hold of credit in the future.

SOURCE: FLA, 26/05/09

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