Credit card spending hits two-year low

by Gill Montia

Story link: Credit card spending hits two-year low

In a statistical release covering the second quarter of 2009, APACS has reported that while plastic card spending overall increase by 3% year-on-year, to £95.5 billion, spending on credit cards contracted.

According to the UK payments association, the number of purchases and the amount spent fell by -0.1% and -1.0% respectively, taking credit card spending to its lowest level in two years.

In addition, the ratio of credit card repayments rose 1.2% on the same period of 2008, meaning that credit card repayments have stayed consistently higher than the historical average over the last three years, as consumers spend less and pay back more.

Debit cards accounted for 74.7% of all plastic card purchases during the period, up 1.4% from a year earlier, and the total values of cheques fell by 20.9% year-on-year, APACS said.

In related new the Bank of England has recently warned of the dangers of consumers reining in spending during the recession.

In its latest quarterly review the bank explores “the paradox of thrift”: as consumers look to increase their “precautionary” savings they could hamper a return to economic growth.

This could then impact on the ability of individuals to save, as a longer, deeper recession drags down household incomes.