Three quarters of consumers have changed their credit card habits

A new study from Forbes Advisor has revealed that nearly three-quarters (74%) of British credit card holders are being forced to change their credit card usage amid crippling inflation.

Within the survey, respondents were asked specifically how the cost of living crisis affected their credit card activity. In total, more than half (57%) claimed that their credit card usage has increased. Contrastingly, just one in six consumers (17%) are relying on them less frequently. Of those who have increased their credit card spending, half (50%) are struggling to keep up with their monthly repayments. Overall this means that more than one quarter of consumerss (26%) are falling deeper into debt every month.

The nationwide study highlights the financial discrepancies present, generation to generation. Four in five (81%) Gen Z credit card holders are utilising them more frequently, as everyday costs continue to climb.

More than half of these credit card users aged 18 to 24 (51%) are struggling to keep up with credit card repayments.

The outlook is similarly bleak for those aged 25-34, with more than two thirds of respondents within the age category (71%) using their credit card more regularly. Furthermore, over two in five (44%) are finding it tough to keep on top of monthly payments.

The study found a clear age correlation between the frequency of credit card usage, and the ability to manage monthly repayments. This only remains true however, for those up to age 64.

More than half of older adults (54%) in the age category of 65+, are now being forced to use their credit cards more regularly, as the cost of living bites. Further analysis highlights that one in five (21%) pensioners are struggling with monthly repayments. This is particularly worrying news, as costs are likely to spiral as we move into winter.

Increased credit card spending is greatest in the West Midlands, where more than two-thirds (70%) claim to be increasingly reliant on their credit card. This is followed by consumers in London, with 66% of holders using their credit card more frequently. Respondents in Northern Ireland came third on this list.

While credit card usage ranks slightly lower in Scotland (60%), research revealed that Scots are struggling the most to keep up with their repayments. More than two in five (43%) claim to be struggling to pay back their credit card debt monthly. Consumers in London fared second again in this category (35%), and credit card holders in the West Midlands third (33%).

Laura Howard at Forbes Advisor, said “The news that inflation climbed again to 10.1% in the 12 months to September – from 9.9% in August – will hardly come as a surprise to UK households who have been suffering the effects of rising costs for months. And our worrying research reveals that, from Gen-Z to pensioners, people are increasingly relying on credit cards to plug the gap – and even struggling to make repayments.”

“Our research also mirrors the latest industry data which shows that, while the amount being spent on debit cards is dropping, on credit cards it’s rising fast. According to UK Finance, £57.5 billion was put on debit cards in July, which was 6.3% lower than in July 2021. The total £18.8 billion which was spent on credit cards in July was a staggering 17.1% higher than the same month in 2021.”

“Nobody wants to rack up interest on a credit card – and, understandably, just getting by day-to-day is the objective for many. But addressing credit card usage could be time very well spent. Where at all possible, do not load debt onto interest-bearing credit cards. Average APRs stand at an eye-watering 18.66% according to the Bank of England’s latest Money and Credit Report which can quickly create a spiral of unaffordable interest payments.”

“Always look for a credit card offering 0% on purchases where you can and make shifting any existing card debt to a 0% balance transfer card an absolute priority. If this is out of the question – or your credit score won’t stand up to the acceptance criteria – at least pay more than the minimum required by the provider, so you are eroding some of the capital debt.”

British credit card holder spending habits	Total	18 to 24	25 to 34	35 to 44	45 to 54	55 to 64	65 and over
Yes – I use my credit card more but I pay it back monthly	28%	30%	27%	25%	23%	31%	33%
Yes – I use my credit card more but am struggling to keep up with repayments	29%	51%	44%	29%	22%	11%	21%
Yes – I use my credit card less	17%	14%	18%	23%	21%	15%	13%
No – My credit card usage hasn’t changed	27%	5%	12%	24%	35%	43%	34%