MONEY TALK By Stuart Cliffe Chief executive, National Association of Banking & Insurance Customers

The plastic in your pocket may be flexible, but it may not be your friend.

As the country recovers from yet another Christmas spree, tens of thousands of credit card customers are facing the grim reality of steadily increasing debt.

Card issuers do compete aggressively to attract customers, the number of different cards and personal loans on offer has exploded in recent years.

However, many believe this marketplace is not based on genuine benefits, low prices or good service.

The Treasury Select Committee had to ask a maths professor for help as it struggled to understand the tariffs and charges published by High Street card providers

Don Cruickshank highlighted excess cost - and lack of competition - in his March 2000 report into UK banking.

While other commissions and committees have echoed these findings since, our increasing reliance on plastic involves other dangers than simply the interest rates charged.

The credit card industry is wedded and chained to its small print, impenetrable conditions and complicated interest calculations.

Recently, the Treasury Select Committee had to ask a maths professor for help as it struggled to understand the tariffs and charges published by High Street card providers.

Zero sum game

Last year, Barclaycard came under fire for its credit card promotions - a 'zero interest rate' card - provided only if at least �50 per month was charged to the card.

Failure to spend �50 a month led to a less attractive rate of interest being applied.

There is a sting in the tail when using a credit card cheque

Other card providers have used variations on the zero interest theme for transferred balances, with payments credited to the transferred balance rather than any subsequent purchase.

The hidden danger is that until the whole transfer is paid off, purchases continue to accumulate another debt attracting substantial interest charges.

New regulations will come into force later this year requiring an 'honesty box' on correspondence and advertising to make it easier to compare account charges and costs.

Credit cheques

Many people would have received cheques through the post issued by their credit card provider.

Credit card cheques are comfortably familiar and could be mistaken for a replacement of a traditional bank cheque.

However, there is a sting in the tail when using a credit card cheque.

The cheques incur interest from the day the money is paid and often additional charges on the account are levied.

What is more, use a credit card abroad and charges are applied for transactions on foreign cash machines and for converting overseas purchases into UK pounds.

Pre-approval

Many consumers have been rejected for credit in the past - possibly when they were younger and had no history of loan repayment.

Therefore, to receive, in our credit fuelled times, a pre-approved loan or credit card can be taken by some as a sign of having arrived.

More customers every day are being tempted into situations that will incur debt, and build bad spending habits, then given higher credit limits to reward excess.

They are then offered more benefits to control that debt through balance transfers and concessionary interest rates that will only complicate and probably increase their problems.

Overall, it is no surprise that 2004 promises to be a record year for bank profits and many people are drowning in a sea of debt.

Take control

The simplest advice for anyone in debt trouble is to stop spending.

Bin the credit card cheques, tempting offers and notification of a pre-approved loan.

Spend only what you have, draw up a budget and get on top of debt.

The views expressed are solely those of Mr Cliffe and are for general information only.

Hey Big Spender! will be broadcast on Wednesday, 28 January, 2004, at 2100 GMT on BBC One.