The amount of credit requested for purchases on "buy now, pay later" terms has increased during the economic downturn. In-store credit, often needed to buy more expensive items including sofas and electrical appliancess, has increased as it can be difficult to get a loan in these credit crunch times.

Charities have said that debt is a risk for the socially deprived as the final cost of a Hire Purchase agreement could be much greater than the cost of the original purchase.

Coping with debt

Mortgage lending is still sluggish, but in store credit deals are on the rise, allowing shoppers to make small or no deposit up front and still take the goods home.

"With a depressed housing market, many people are choosing to improve their homes and replace furnishings rather than move house," said Geraldine Kilkelly, head of research at the FLA. "Retailers and lenders have been offering attractive interest-free credit and deferred payment deals on store instalment credit.

"We have seen a similar trend in recent months in the motor market. The proportion of car sales represented by instalment-type credit available in the dealerships has grown from 48% to 54% over the last year. This is mainly a response to competitive pricing and reduced availability of other sources of credit."

Risks of debt

The risk is that if borrowers don't keep up with the payments, the provider of the credit can take the goods back. However, the FLA said that the smaller cost if items suchs as settess means that the risk of default is lower than for bigger loans. However, borrowers in socially deprived areas could be more at risk.

"It is no surprise that this is an area which is growing during the credit crunch, but it can be more costly in the long run," said Chris Tapp fromCredit Action .

Debt charities advise that people in financial trouble should prioritise how they repay their debts, paying utility bills and council tax first. However, anyone who is worried about missing payments should contact their lender as they may be able to come to an agreement over reduced repayments.