More than half (55 per cent) of all UK credit card spending is on everyday purchases such as groceries and fuel, a new study reveals.

A report by the Morgan Stanley Card Index indicates that UK consumers are increasingly using credit to fund everyday spending, with credit card spending on everyday items up by around four per cent over the past three months and 11 per cent over the past six months.

Britons spent an estimated £124 billion on credit cards last year and Morgan Stanley suggests that credit card usage is changing, as cards increasingly rival more traditional forms of payment for everyday purchases, such as cash, cheques and debit cards.

Morgan Stanley Credit Card marketing director, Patrick Muir, said: "Savvy credit card customers are taking advantage of credit card incentives and beginning to use their cards more and more for everyday purchases. Britons are increasingly more likely to shop around and see how they can be rewarded for their spending with loyalty schemes such as cash back, in addition to taking advantage of the interest-free period that many cards offer."

Britons are expected to spend an average of £363 on items for the house and car during the second quarter of 2006, with groceries accounting for the majority of purchases.

Figures from analyst Mintel indicated this month that UK consumers spent up to £1 trillion in 2005, with spending up by 43 per cent in real terms over the past decade, fuelled by soaring house prices, economic growth and rising fuel costs.