Officials stated that there had been a rise in the number of people failing to make repayments on their cards, and this had impacted significantly on its losses for the first quarter. However, whilst profits for the quarter did fall significantly the losses were not as bad as those that had initially been forecast.

The losses incurred by the financial giant have mainly been in the United States, and the economy and financial climate in the States at present means that losses from defaults had been expected, as many struggle to keep up with their repayments.

American Express officials have stated, however, that the losses incurred as a result of defaults in America had been counteracted by encouraging performance overseas.

The chief executive of American Express stated: “While we continue to be cautious about the US economy, we are encouraged by our performance internationally.”

In the meantime consumers within the UK continue to also battle to keep on top of their debts and financial commitments, and a recent report has shown how credit card providers have continued to hike up rates and fees on cards over recent months despite the three recent base rate cuts.

This could result in an increase in the number and level of defaults in the UK, particularly given the other living cost rises that consumers have had to factor into their budgets. The situation is likely to be made worse by the recent abolition of the ten pence tax bracket, which could see those on lower incomes even worse off.

The Abbey has now launched a new credit card that offers borrowers a host of money saving benefits, which could help those looking to cut back on interest and charges on their credit card spending, and could even help those looking to go abroad and use their credit card.

The new Zero card from Abbey offers six months interest free credit on both balance transfers and purchases, which could help consumers to save money on interest. Unlike many other balance transfer cards the Zero card will not charge a balance transfer fee, which could also save consumers money, as this fee is usually between 2-3 percent of the total amount being transferred.

In addition to this the card will not charge for cash advances, and will not charge foreign exchange fees, enabling borrowers to save even more money.

Officials from the bank have claimed that this is the first credit card to get rid of all of these fees at the same time. An Abbey official said: “We promised the market that we would continue to innovate and that is exactly what we’ve done.”

One industry official added: “The launch of this card is fantastic news for consumers. Not only will those looking for a short-term balance transfer deal benefit but also those who are about to embark on their summer holiday. In a world where rates and charges are increasing on credit cards its good to see a lender bucking the trend and removing some of these charges.”

The card, called the UreLife card, was launched earlier this month, and incorporates government approved proof of age verification that will prove invaluable to retailers who do not want to run the risk of selling certain products to underage customers.

A UreLife official stated: “The UreLife card is a new, safer way to carry, manage and spend money. Under-18s will have all the benefits and freedoms of cashless spending, while the proof-of-age mechanism will restrict purchases of alcohol, cigarettes and other age-restricted products. The benefits for retailers and parents are clear to see.”

The prepaid card is available for all ages, but the age verification will prove most useful with cardholders that are under the age of eighteen.

The cards are available to five different age groups, which are 12-15-years; 16-17-years; 18-20-years; 21+ years; and 60+ years. There is a different colour code assinged to each of these age groups. The cards carry a National Proof of Age Standards Scheme (PASS) hologram.

Jeremy Beadles, chief executive of the Wine & Spirit Trade Association (WSTA), said: “Our retail members are committed to preventing the sale of alcohol to under-18s, and we welcome the UreLife card as a tool to help retailers in this work.

By carrying the PASS hologram, retailers can be confident that the UreLife Card is reliable proof of age, and by providing proof of age within a payment card, it encourages young people to carry the ID they need to prove they are old enough to access the services and goods they are entitled to.”

The global credit crunch has taken its toll in all finance areas, including the credit card sector, and credit card providers have become much tougher with regards to who they will lend to, what sort of deals they offer, and what sort of credit limit that will be able to consider.

Officials have warned that consumers hoping to save money on their debts by transferring to a 0% balance transfer credit card could find that their options have been severely limited unless they have excellent credit.

These cards have become very popular over recent years, enabling those with debts on high interest credit cards to transfer the debt and save on interest. However, the limited choice and increased stringency stemming from the credit crunch means that some consumers may no longer be able to consider this as an option.

One official stated: “If people can’t afford their non-priority debts anymore sometimes they’ll stop paying their mortgage as well. It’s definitely having a knock-on effect. Although people with a positive credit history may still find that the choices they can make have not been limited to a great extent.”

Other recent reports have shown that both standard and balance transfer credit cards have seen interest rates hikes over recent months despite the base rate cuts, and many 0% balance transfer deals have now stopped offering capped transfer fees, which means that consumers may have to pay far more for the privilege of transferring their balance depending on how much they intend to transfer in total.

Consumers in the UK have had to put up with a number of payment increases over recent months, and whilst interest rates have come down for a third time since December, other bills and costs have risen, including energy bills, water bills, petrol, and food.

As a result of these rising costs many people are struggling to make ends meet, and in order to try and avoid defaulting on repayments and bills, as well as being able to afford living costs, many have turned to their credit cards, resulting in credit card spending nearly trebling to £350 million in the past month.

Experts have warned that using a credit card to find day to day expenses or pay bills can be a slippery slope, as consumers will quickly find that they no longer have the credit that they need and will have to look for an alternative – in addition to paying off the credit card debt that they have accrued.

However, whilst industry experts have said that it is not a good idea to use your card regularly to fund living costs and bills they have also recognised that this may be necessary from time to time.

In these cases experts have recommended that consumers find the most affordable credit card deal so that they minimise on the amount that has to be repaid. Borrowers should carefully compare credit card deals in order to find the most affordable one, but should bear in mind the increased difficulties in getting finance due to tight credit conditions.

Whilst this should spell good news for borrowers reports have shown that lenders are continuing to raise their interest rates as a result of the effects of the credit crunch, which means that many borrowers may not be any better off despite the base rate cuts.

Costs have gone up in many areas of borrowing, such as loans, mortgages, and credit cards, all of which have had an adverse effect on consumers’ affordability and a knock on effect on the economy.

The research shows that the average credit card interest rate has risen by more than half a percent in the last six months despite the 0.75% cuts that have been applied over the past few months.

In addition to the average credit card interest rate going up – rising to an average 17.12% - the average balance transfer rate has also risen, going up by around 0.83% to 15.95%.

Experts have stated that borrowers are really having to pay the price of the global credit crunch by paying increased fees on their borrowing even though the base rate has been falling.

One industry official said: “Most of us would normally seek out a new zero per cent deal to tide us over the bad times, but with lenders playing a cautious game, getting one of those cards is more difficult than it used to be. This means more of us will have to use our current credit card and if the 0 percent deal has expired, you’ll be borrowing money at a rate of around 16 percent; be careful what you spend on the plastic because the interest will soon mount up.”

Experts have stated that customers that use their credit cards in this way can not only avoid paying expensive rates of interest on their borrowing, but can also enjoy making a little back from the credit card firm.

Many customers that repay their balance in full each month have rewards based credit cards such as air miles cards, cash back cards, retail rewards cards, travel rewards cards, and more.

By having rewards based credit cards these consumers are able to accrue rewards by spending on their card, yet they are charged no interest for spending on the card because they are repaying the balance in full each month.

An official involved with the study stated: “With the encroaching credit crunch being felt by consumers through the price of credit and the bills that come through their front door, it is uplifting to see that more than half of credit card customers can still afford to clear their balance each month and are not relying on their credit card for day-to-day essentials, getting further and further into debt.”

None of the consumers that were polled said that they had consolidated their credit card debts with a loan.

The official from fairinvestment.co.uk said: “The fact that we had no respondents who said that they took out a personal loan to pay off their credit card balance is a strong indication that the credit crunch is having an affect on the availability of credit to consumers, just as it is for people trying to get a good mortgage deal.”

The level of personal debt in the UK has been of concern for some time, and credit card debt is through to make up a large chunk of the debt mountain.

The Shadow Business Secretary, Alan Duncan, has accused credit card providers of luring customers into getting into debt by offering deals such as 0% offers, but says that when the special deals come to an end and customers can no longer afford to pay the crippling interest payments the credit card companies lose interest in the client and simply ’spit them out’. He slated credit card providers for adding to an already worrying mountain of personal debt in the UK.

He told a newspaper that lenders needed to look at the human misery that could be caused by consumers getting themselves into unmanageable levels of debt.

He added that it was not acceptable practice, and that it was classed more as ‘corporate irresponsibility’. He also stated that this would all change in the event that the Tories get back into power.

Despite the attack from Duncan many credit card providers have been cutting right back on their lending levels, and have increased stringency with regards to who they will lend to, as have other lenders such as mortgage and loan providers.

This is due to the chaos caused by the global credit crunch, as well as by spiralling bad debt levels that are affecting the profits of credit card providers.

The extended warranties come free of charge, and a range of products will be covered according to the announcement made earlier this month by Nationwide officials.

A number of credit cards offer extended warranties on purchases, and consumers are urged to familiarise themselves with the details of any extended warranties in order to ensure that they know what is and isn’t covered.

It is also important for consumers to make sure that they register the relevant items so that the extended warranties can be put into place.

With the extended warranty offer from Nationwide customers only have to register the purchase that they make in order to enjoy the additional protection. With the manufacturer warranty coupled with the additional warranty offered by Nationwide means that consumers can enjoy up to three years protection for free on some items.

Amongst the items on which the additional warranty is available are DAB radios, camcorders and DVD players with hard drives, home cinema systems, freeview boxes, and other electrical gadgets.

One official from the Nationwide said: “Any Nationwide credit cardholder who uses their credit card to purchase an electrical item for use within their home can receive a year’s extended warranty cover free of charge - simply by registering it. We have recently improved the range of items that can be covered, to include newer technologies such IPODS, MP3 and MP4 players, Home Cinema Systems and Freeview boxes - which previously weren’t covered.”

The data comes from the UK’s fraud prevention service, CIFAS, and shows that the number of people that lie about certain things on their applications for credit cards and finance is quite worrying.

Credit cards have already been blamed for adding significantly to the UK’s personal debt mountain, and many of those that are suffering financial difficulties are trying to deal with credit card debt.

Telling lies in order to get a credit card puts consumers at the risk of quickly finding that they cannot accord repayments, or puts them at risk of being rejected right away once their lies are discovered, and having their credit ruined.

Lying about a credit rating was highlighted as one of the most common on applications for credit cards and finances, according to the data from CIFAS. Many people lie about their credit history if it is a bad one in the hope that they can fool the lender and get the finance that they need, but according to officials many do not realise that the lender will carry out checks on the credit file so will be able to verify this information.

Another common area about which lies were fold involved how long the applicant had been at their current address. The figures suggested that many of those that had been at their address for a relatively short period tended to exaggerate these timescales in order to try and improve their chances of getting credit.