People 'should be wary of credit cards'

Consumers should be careful of using certain methods of borrowing during the credit crunch as they could get "their fingers trapped", according to a personal finance website.

Research from Fool.co.uk has revealed that one in eight credit card holders (12 per cent) has had their credit card credit limit cut, with those aged 34 to 49 the most affected by reductions.

However, the personal finance website also revealed that one in seven in the 18 to 25 age group has had additional facilities given to them by their credit card provider in the last few months, something that the site seems wary of.

"There are indications that lenders are pulling down the shutters for some customers, and holding the door open wide for others," said David Kuo, head of personal finance at the website.

He added that what "banks give with one hand they can easily take away with the other", suggesting the extended credit to 18 to 25-year-olds through credit cards may not be the best loans for them.

Earlier this month, Sainsbury's Bank suggested people make a new year's resolution to deal with their debt, suggesting people look for the best loans to consolidate existing credit card and loan debts.