Credit card spending decreases whilst debit card spending increases 22%
The amount spent on credit cards has fallen, compared to pre-pandemic times according to the latest UK Finance card spending figures.
Debit card usage has soared by 22% in June while contactless payments have leapt 70% in the past two years.
The figures showed that there were 1.9 billion debit card transactions in June, 46.6 per cent more than in June 2020 and 25.4 per cent more than June 2019. The total spend of £60.5 billion was 13.2 per cent higher than June 2020 and 22.3 per cent higher than June 2019.
There were 309 million credit card transactions in June, 35.5 per cent more than in June 2020 and 9.3 per cent more than June 2019. The total spend of £16 billion was 32.5 per cent higher than June 2020 but 1.5 per cent less than June 2019.
Outstanding balances on credit card accounts have contracted by 6.9 per cent over the twelve months to June, as a result of repayments outstripping new borrowing in the year.
There were 1.8 billion debit and credit card transactions in the UK in June, 42.4 per cent more than in June 2020 and 15.8 per cent more than June 2019. The total spend of £67.4 billion was 19.1 per cent higher than June 2020 and 16 per cent higher than June 2019.
Contactless payments accounted for 51 per cent of all credit card and 66 per cent of all debit card transactions.
There were 1,169 million contactless card transactions in June, 73.8 per cent more than the 673 million in June 2020 and 69.6 per cent more than the 689 million in June 2019. The total value of contactless transactions was £14.2 billion in June, a 66.2 per cent increase on £8.5 billion in June 2020 and 122.4 per cent increase on £6.4 billion in June 2019.
Whilst the number of contactless credit card transactions was 92.4 per cent higher than June 2020 and 39.9 per cent higher than June 2019. The number of contactless debit card transactions was 71.4 per cent higher than June 2020 and 75 per cent higher than June 2019.
Commenting on the latest figures Laura Suter, Head of Personal Finance at AJ Bell, said “We’re becoming a nation who shuns debt and sticks to debit cards instead. Over the past two years we’ve seen the amount spent on credit cards fall, while the amount on debit cards has risen by almost a quarter. If we compare spending in June this year with June 2019, in pre-pandemic times, the amount we put on credit cards fell by 1.5%, while the amount spent on debit cards increased by more than 22%.”
“The silver lining to come out of the pandemic is that many people were able to pay off debt and shore up their savings. That means that many now don’t need to put spending on their credit cards, as they have sufficient spare cash to pay for stuff. As a nation we’re continuing to pay off our credit card debt too, with total balances on credit cards dropping by 7% in the past year as we’ve paid off more than we spent.”
“However, despite slashing spending and saving money in the pandemic many people have already forgotten their frugal ways and have returned to spending with gusto. The amount spent on debit cards in June was £60.5bn, around £11bn higher than two years previously. Some of this will be essential items people weren’t able to buy during lockdown, but lots of it will also be people splurging after so long away from family, friends, shops and eating out.”
“But it seems there’s still a place for credit cards, with people putting pricier items on credit, as fewer credit card payments are contactless when compared to debit cards – suggesting they exceed the current £45 limit. Contactless payments have soared in the past two years, as the limit was raised from £30 last year, and this will no doubt leap again when the limit jumps to £100 next month.”