• Brits cut their credit card spending in half during lockdown
• Outstanding balances on credit cards fell by the largest amount in a decade
• More card spending moved online as shops shut in lockdown
Laura Suter, personal finance analyst at investment platform AJ Bell, comments on the latest UK Finance figures on credit and debit card spending:
“As a nation we cut our credit card spending in half in April, during the first full month of lockdown, as our ability to go out and spend in bars, restaurants, attractions and on the high-street was halted. The figures from UK Finance show that we put just £8.7bn on plastic in April, half that of the same month last year.
“The amount we all spent on debit cards remained about the same, showing that lots of people were spending within their means and not having to reach for the credit card as the end of the month appeared and their bank accounts looked bare. This is understandable as lots of people will have seen their monthly costs dramatically fall while their income has remained unchanged.
“However, the figures only tell half the story; while lots of people reduced credit card spending and even paid off some of their balances, lots of others will have ramped up their spending on plastic and their debt levels. Those people who lost their job or saw a cut to income and had no financial safety net to fall back on will have seen their debt soar during the current crisis.
“While banks are offering payment holidays and waiving some fees, these are only temporary sticking plasters and as this tide of help is wound back we’ll see lots of people financially exposed and struggling to meet the cost of their debt.”
