Latest figures from UK Finance have shown that consumer credit card spending on some services slowed during March.
Lockdown restrictions implemented towards the end of March resulted in a sharp drop in “non-essential” retail activity, travel and entertainment spending.
The figures showed that there were 1.6 billion transactions on debit cards made by UK cardholders both in the UK and overseas in March 2020, 4.9 per cent more than in March 2019, according to the association’s Card Spending Update for March.
This reflected a total spend of £52.1 billion, 2.2 per cent more than in the same period in 2019.
Meanwhile there were 272 million transactions on credit cards in March, 1.1 per cent fewer than in March 2019. Total credit card spending was £14.5 billion in March, 12.3 per cent less than in the same period a year earlier. This coincides with the implementation of lockdown.
The annual growth rate of outstanding balances on credit cards contracted by 2.2 per cent in March 2020, the first time it has shrunk since October 2012. The impact of the introduction of payment deferrals on 9 April 2020 will be more apparent in future months.
Eric Leenders, Managing Director of Personal Finance, UK Finance, said “The reduction in credit card transactions and the fall in outstanding balances coincides with the implementation of the Covid-19 lockdown from 23rd March, with opportunities to spend much reduced. We expect that this pattern of reduced spending will be reflected throughout the lockdown period. Meanwhile, spending on debit cards in March continued on the upward trend seen in previous months.”
“The banking and finance industry has a plan to help their customers at this difficult time. Anyone who is experiencing financial difficulty should contact their credit card company to discuss the help available to them, including repayment holidays to provide customers with short-term support. It’s important to remember that interest will normally continue to be charged during a payment holiday and the amount owed will not reduce, so customers should carefully consider whether it is the best option for them before proceeding.”