CONSUMERS' finances are coming under increasing strain with millions of bills going unpaid and four out of 10 people admitting they are now reliant on credit, research has showed.

A quarter of credit cardholders said they had started 2008 more dependent on credit than they were last year, and 41 per cent said they would be relying on their plastic to meet day-to-day living costs such as groceries, the Post Office said.

Director of lending at the Post Office Gary Fitton said: "Typically January is the time of year when people struggle with their money the most.

"Many people have over-stretched themselves over the Christmas period and have little choice but to use their credit card in the New Year."

At the same time research from financial website MoneyExpert.com found that an estimated 6.9 million household bills were either paid late or went unpaid during the past six months.

It warned that consumers' finances were likely to come under increasing strain going forward due to rising energy prices, while people would probably find it increasingly difficult to get credit.

Around five per cent of people admitted they had either missed a council tax payment or paid it late, while three per cent had struggled to pay a gas or electricity bill and two per cent had not been able to afford their telephone bill.

Chief executive of MoneyExpert.com Sean Gardner said: "For some time we have been waiting to see how the financial squeeze would affect the average household.

"Nearly seven million unpaid household bills is a fairly conclusive sign that we are feeling the effects.

"While interest rates have stopped climbing there are plenty of other factors that could make life even tougher for some people.

"With energy prices rising and credit becoming harder to come by, there could be plenty of normal people who will find paying even their basic household bills a daunting prospect in 2008."

But despite the strain people's finances are coming under, half of credit cardholders said they planned to use their card to buy something in the January sales and 28 per cent said they would use it for a big purchase such as a holiday.

However, 53 per cent of those questioned admitted they were unable to repay their credit card bill in full each month, the Post Office found.