Britons are in the grip of a love affair with "plastic", so much so that we are the most "credit happy" of all our continental cousins.

According to a new report from financial analysts Datamonitor, there are 100 million credit and debit cards circulating in wallets and handbags in the UK.

This love affair is cultural, according to the report.

Julie Cunningham from Datamonitor financial services analyst says: "In the Anglo-Saxon world, banks are looked upon as supermarkets, whereas continental Europeans trust their finances to their banker like they trust their health to their doctor."

Sadly, many more Britons may be needing to see a doctor as a result.

Love credit

According to new figures from Datamonitor there were 169 cards for every 100 Briton in 2000 - and 50 million are credit cards.

More than half of adults own a credit card, but within a few years, 25% more people will join them.

Paying with a credit card has its benefits.

If you buy goods with a credit card, and as long as the goods cost over �100, the credit card company will also be liable if they are faulty.

It can also be a cheap way of borrowing, especially in the current market where rates are as low as 0% for introductory and balance transfers.

Debt problems

But many Britons are far from credit happy.

There are up to two million households in serious financial difficulties in the UK, according to the Money Advice Trust.

Debt counsellors deal with the fallout from the credit industry every day. A change in circumstances, divorce, redundancy, or easy credit can end up making repayments unbearable.

Personal debt has reached chronic proportions, says Amy Brown from the Consumer Credit Counselling Service (CCS).

But she warns that it could become an epidemic if more people lose their jobs.

She says: "There is always a time lag before people seek help and they choose to seek help. Unexpected life events can tip the balance for people who are already stretched because of the cost of living."

Free advice services, as a consequence, are struggling to cope with the increasing numbers of people with debt problems.

The National Association of Citizens Advice Bureaux recently reported that it was now dealing with �1.2bn of new problem debt a year.

National Debtline, another free advice service, received more than 140,000 calls last year, but it could handle just a small proportion - only 25,000 got through.

So, what help are these free organisations getting?

Government aid

The government is contributing �1m to three new pilot schemes, including the creation of a national call centre to expand existing help available over the telephone.

Banks are also helping more. The Royal Bank of Scotland has pledged �1.7m over the next three years to debt-advice services through a gift to the Money Advice Trust.

The Office of Fair Trading is also stepping up its efforts to crack down on dodgy lending practices.

It says that it will get tough on these companies using the greater powers it now has under the "Stop Now" orders, which were introduced in May 2001.

But these powers may be too late.

Figures seen by BBC News Online reveal that people's ability to pay back debt is diminishing.

Defaults across a range of credit has increased by more than 30% over the last year.

If you are in debt and do not know where to turn, read "Q&A: How to manage debt" - see link above.

Further information

• "You wouldn't credit it. Ten things you never knew about credit law" - useful, relatively unknown tips on credit law, available on the OFT website (see link).

• BBC News Online's "Q&A: How to manage debt"

• The Community Legal Service has a leaflet on "Dealing with debt. Your rights", which can be obtained from the legal services website or telephone 0845 3000343 or e-mail [email protected].

• There are a number of free advice services to help you manage debts:

  Try Consumer Credit Counselling Service (0800 1381111), National Debtline (0808 8084000) or the National Association of Citizens Advice Bureaux (020 7833 2181).