The popularity of credit cards is declining, as consumers increasingly favour using cash or their debit cards.

Debit card usage reached record levels during 2004, to account for more than two-thirds of all plastic transactions, as consumers used the cards as a substitute for cash, according to payment body Apacs.

At the same time, use of credit cards grew at its slowest for more than a decade, with only a four per cent rise in the number of cards in issue, and an eight per cent increase in spending, to £123bn.

But spending on debit cards soared by 15 per cent to £150bn, while the number of transactions was nearly ten per cent higher, at 3.7 billion.

About 40 million people now have a debit card, while just over 30 million have a credit card.