Credit, Collections & Insolvency News
More than half (55%) of consumers believe that the increased contactless limit could encourage people to spend more money this festive season.
NerdWallet’s Consumer Borrowing Index, a nationally representative study of 5,000 UK adults, has revealed two in ten admitted to spending with less thought since the limit rose to £100 from £45 on 15 October 2021.
The ease of contactless spending puts consumers at risk of overspending and mounting up debts. Nearly six in 10 (58%) felt that the £100 limit would encourage more people to spend beyond their means, with the barrier of having to input a PIN removed.
This higher limit for cards and mobile payments has also prompted worries about the risk of falling victim to fraud. With larger amounts of money now easier to spend with a simple tap, 61% of people were more concerned about the prospect of card theft – and the accidental debt that could result from this.
Younger generations appear more relaxed in their approach to contactless spending and mobile payments following the limit increase.
Over a quarter (26%) of Gen Z and a third (32%) of millennials, who took part in the study, noted they spent more. The younger generations admitted that they spent with less thought than they did before the new limit was introduced compared to only two in 10 Gen X and 8% of Baby Boomers.
Denise Ko Genovese, Senior Personal Finance Expert at NerdWallet, said “Keeping tabs on your cards has never been more important. Although contactless has always posed a risk when it comes to card loss or theft, now that the limit has risen to £100 we advise that consumers get to grips with their banking facilities and know-how to block or report their card should they suspect any fraudulent activity. For those worried about the impact of the increase on their spending habits, many banking providers now offer the option to adjust the contactless limit, so people can better manage their budgets before heading to the checkout.”
“With the purchasing experience already reduced to a simple tap, the increased limit makes it even easier to rack up your spending. As we approach the seasonal sales, you should get smart with your budget as it is even more important to ensure you are spending within your means.”