CARD SPENDING SET TO SOAR BY 45%

Embargoed until 00.01 hours, 24 April 2002. CARD SPENDING SET TO SOAR BY 45% Britons expect to spend an average of £1,066 on their credit cards in the next three months - a rise of 45% in six months - according to new research findings from the Morgan Stanley Card Index. Following recent reports that house prices have risen by 16% 1) , the new Morgan Stanley figures, which track predicted credit card expenditure, add a new dimension to the current consumer borrowing debate. At a time when the Bank of England has announced that the British are in a record amount of debt, with consumer credit growing by £1.9 billion in February alone, the new Morgan Stanley findings question whether the significance of debt can be assumed simply by its size. For example, whilst consumer expectations on credit card spend have risen from £596 to £1,066 in the last six months, the Morgan Stanley study also reveals that Britons are in control of their credit card spending - 60% of those surveyed said they would repay their full balance on a monthly basis, whereas only 1% said they would fail even to meet the minimum monthly payment. -- more -- Morgan Stanley asked a GB representative sample of 2,000 people how much they intended to spend on a range of items, using their credit card, in the next three months - and, what proportion of their credit card bill they intended to pay off each month. The findings, compared to the previous two quarters, are presented as average spend. Key areas of credit card spend: · Holidays topped the poll, alone accounting for 26% of all credit card spend in the next three months. This suggests that consumer confidence in foreign travel is more buoyant with people expected to spend over three times as much in the next three months than they were during the final three months of 2001 (£276 versus £90). People in the South East are driving the holiday boom, spending eight times more than people in the North (£416 versus £52). · As the Spring sunshine heralds the start of DIY season, home improvement has shot to third place as the nation expects card spend to rise by a massive 237% compared to three months ago (£131 versus £55). The findings suggest that home improvement is as popular as home purchase and, across the country, houses are being done up in time for first time buyer season. · With concerns prevalent over Britons attitude towards health and fitness, people intended to spend 19 times more on food (£197) than gym membership or keep fit (£10). Either Britons have already paid for their annual gym membership or their healthy New Year resolutions could already be waning. -- more -- · The age of chivalry may not be dead - men are still twice as likely to pick up the bill at restaurants (£67 versus £39), whilst women are continuing to run the home, spending more on food shopping (£207 for women versus £187 for men) · Men expect to spend twice the amount on petrol and work expenses in comparison to women (petrol: £109 versus £60; work expenses: £92 versus £22) Intentions to clear credit card balances The same people were also asked how much of their credit card bill they intended to pay: · 60% intend to pay of their balance in full upon receiving their monthly statement. · 10% intend to pay the minimum amount required. · 25% of those asked intend to pay more than the minimum but less than the full amount. · Only one per cent intend to pay nothing at all or ignore their statement. -- more -- Tyrrell Schmidt, UK Country Head for Morgan Stanley's Consumer Banking Group, commented: "With concern mounting over the level of borrowing being incurred by British consumers, it is pleasing to note that the majority of people seem to have their credit card spending under control. The upturn in credit card spend suggests that the high levels of consumer confidence witnessed at the start of the year were not just temporary. With people set to spend record amounts on their cards, it is important that they think smart and choose the card that is most appropriate to the way they manage their finances. For example, cardholders looking to pay off their balance each month should give thought to the reward schemes on offer, whereas a good long term rate is the most important factor to those intending to make use of a credit facility." Regional findings · 71% of Northerners intend to spend absolutely nothing on eating out in the next three months, while spending an average of £198 on food shopping. This compares to Londoners who plan to live more on the extravagant side, by spending an average of £92 each on meals out. · The Welsh came in as having the smallest appetites, with their plans to spend an average of £27 on dining out, and just £98 on food shopping. · While men appeared to be more generous than women, spending an average of £46 on presents (compared to £32) they were also the most self-indulgent, as they planned to spend even more on themselves - aiming to buy £55 worth of luxury items, compared to the £33 women planned to spend on themselves. -- more -- · East Anglians emerged as devoted pet lovers, spending £47 each on their pets - much more than South Easterners who plan to spend just £11. The Welsh were the least generous, planning to spend absolutely nothing on their pets. ### Notes to the editor:. · To be added to the email distribution list for all forthcoming Index stories, email tilly.twickel@fd.com . Regional findings are available on request. · The research was undertaken face to face during the final week of March 2002 for credit card provider Morgan Stanley by R.S.G.B, a division of the Taylor Nelson Sofres Group, among a GB representative sample of 2,000 adults. · Morgan Stanley is a global financial services firm and a market leader in securities, asset management and credit services. With more than 700 offices in 28 countries, Morgan Stanley connects people, ideas and capital to help clients achieve their financial aspirations. · Morgan Stanley is also one of the world's largest providers of credit cards with more than 50 million cardholders globally. Following the launch of the Morgan Stanley Card in September 1999, it is now the largest issuers of MasterCards in the UK. Expected average credit card spend for the next three months April - June January - March 2002 2002 Holiday £279 £182 Food £197 £173 DIY £131 £56 Petrol £86 £90 Clothes £66 £51 Work Expenses £58 £73 Meals Out £54 £46 Luxury items £45 £57 Domestic Bills £43 £32 Presents £39 £36 On-Line tickets £28 £17 CDs / DVDs £12 £13 Books £11 £8 Gym / keep fit £10 £4 Pets £7 £8 According to Halifax house price index over the 12 months prior to March 2002 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/04/22/20020422BIT01440/wkr0001.doc http://www.waymaker.net/bitonline/2002/04/22/20020422BIT01440/wkr0002.pdf