- The amount spent on credit cards has fallen, compared to pre-pandemic times
- While debit card usage has soared by 22%
- Contactless payments have leapt 70% in the past two years
Laura Suter, head of personal finance at AJ Bell, comments on the latest card spending figures from UK Finance:
“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.”