Consumers drift away from credit cards

by Gill Montia

Story link: Consumers drift away from credit cards

Apacs, the body that represents UK payment service providers, has reported December figures for debit and credit card expenditure.

Consumers spent £10.8 billion on credit cards during the month and £21.6 billion on debit cards. Online spending accounted for £4.7 billion of total expenditure.

Credit card spending for the period fell by 4.8% compared to 2008, while debit card spending increased by 3.1%.

The average value of a card transaction in December was at its lowest for six years, at £44.95.

The Association’s director of communications, Sandra Quinn, explains that there were actually more transactions than in December 2007 and that the decline in average value probably reflects the VAT cut and heavy discounts applied by major retailers.

Data from supermarkets also suggest that consumers are purchasing the same number of items but paying less at the checkout because they have opted for discount brands.

Referring to the fall in credit card spending Ms Quinn comments that it “follows the trend we’ve seen over the last four years with customers continually preferring to put most of their card spending on debit card”.

Annual spending on credit cards is currently growing at 1.9%, having increased from £123.9 billion in 2007 to £126.3 billion in 2008.

Meanwhile, spending on debit cards is growing at an annual rate of 9.5%, having increased from £224.0 billion in 2007 to £245.4 billion in 2008.