Latest UK Finance card spending data for January has revealed that the number and value of debit card and credit card purchases fell to its lowest point since the first lockdown.

Credit card spending fell to £10.7 billion in January, down 37.9 per cent compared to January 2020. With high street shops closed due to lockdown restrictions, spending on debit cards was also lower, totalling £47.8 billion, 7.3 per cent less than

The figures also showed that outstanding credit card balances fell by over a fifth in a year (20.7%) whilst the number  of active credit cards in the UK fell for a second month, to 62.78 million. This has fallen just under 2 million in a year.

There were 196 million credit card transactions in January, down 33% from December and 31% from a year earlier. The total spend of £10.7 billion was 28% less than the previous month and 38% less than a year earlier.

There were 1.2 billion debit card transactions – down 27% from December and 18% from a year earlier. The total spend of £47.8 billion was 19% less than in December and 7% less than a year earlier.

Commenting on the figures Sarah Coles, Personal Finance Analyst, at Hargreaves Lansdown said “We hit pause on plastic in January, with card spending lower than any time since the first lockdown, and balances down a fifth in a year. As you prepare to hit play again this spring, it’s vital to consider your relationship with your credit card.

“Part of our plastic pause has been dictated by the banks. In the first quarter of this year, they were approving a smaller proportion of card applications and cutting credit limits. Their key concern was that they didn’t want to take as much risk as they had during more buoyant periods. One consequence of this is that borrowers who tend to switch to avoid paying interest have been finding life slightly harder. It’s one reason why the percentage of credit cards bearing interest has risen slightly to 56%.

“However, a big part of the reason we were spending less in January was seasonal. After the festive splurge, we always tend to rein back spending, and hunker down for winter, so demand for credit cards fell at the start of 2021. This particular season is almost over. The banks are expecting demand to pick up again, especially as the economy reopens, so we can expect credit card spending to return, at least to some extent.

“Now is the time to take stock. During lockdowns we have paid back an awful lot of debt, and while we’re desperate to go out and enjoy life again, we need to make a conscious decision about the role we want debt to play in our lives in future. This is a chance to carry less debt, and focus instead on building emergency savings and putting money away for the future, and we need to think carefully before we pass up this opportunity.”