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“Buy now, pay later” credit deals have risen during the economic downturn according to industry figures. In-store credit was up by 24 per cent in figures from March this year compared with the same month a year earlier.

The figures from the Finance and Leasing Association (FLA), however, also show that the availability of loans from major lenders remains low. One charity said there was a risk of people in socially deprived areas requiring debt help due to the easy availability of higher-interest store credit.

According to Chris Tapp, of Credit Action, the final cost of a hire purchase deal is often much higher than buying a product outright.

FLA figures show that a total of £5.1bn was lent by its members in the UK in March 2009, down 12 per cent on the same month in 2008. The figures reflect the lending habits of diverse credit lenders such as credit card and motor finance providers.

The lending market is still behaving conservatively during the recession, with loans - typically secured on borrowers’ homes - falling by 76 per cent in a year. However, in-store credit deals have leapt by 24 per cent.

These deals from the retailers allow shoppers to pay a relatively small deposit while taking their new purchase home immediately, paying off the lump sum with interest in instalments.

Geraldine Kilkelly, head of research at the FLA says that: “With a depressed housing market, many people are choosing to improve their homes and replace furnishings rather than move house.”

“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 per cent to 54 per cent over the last year. This is mainly a response to competitive pricing and reduced availability of other sources of credit.”