New research conducted by Morgan Stanley Credit Cards has revealed that Britons are using their credit cards to pay for everyday items such as bread and milk and saving less.

The latest Morgan Stanley Card Index has revealed that 44% of most credit card balances is taken up with small-scale purchases such as groceries, petrol and household items.

The over fifties are the most likely to use their credit cards for these small purchases, with people in this age group likely to put half their spending on everyday and household goods on their card over the next three months.

The research findings show that people have changed the way they use their credit cards, now seeing them as an integral part of their spending routine and clearing their balances more quickly. While people are spending more on their cards, they are also clearing the debt quickly. In the first three months of 2005, Britons repaid an average of 78% of their credit card debt.

Patrick Muir, marketing director of the Morgan Stanley credit card, said: "Credit cards have changed enormously over the years and so has the way that people use them. With the majority of credit card balances being cleared in full every month, Britons are increasingly more likely to shop around and see how they can be rewarded for their spending."

Separate research published by Alliance & Leicester shows that although consumers' disposable income has risen by 28% since last year, they are failing to increase the amount they save each month.

During the second quarter of the year people expect to spend more cash than they did in 2004, expecting to spend an average of £261 a month, an increase of 39%. During this same period, people expect to save just £88 a month, the same as last year.

Men are seen to have more disposable income than women at £446, compared to £309 for women. This may be because women are more likely to put their small items on their credit cards, with half the value of all credit card purchases made by women over the next three months likely to relate to food purchases and home and car purchases.

Despite having less money, women will spend a greater proportion of their income (75%) compared to men who only spend 66% of their income. At the same time, men will save almost twice as much as women at £115 a month and investing £37 a month, compared with women who save £63 a month and investing just £15.

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