Reduced Credit Card Spending
First published - Tuesday 13th, February 2007
Figures from the Association of Payment Clearing Systems (Apacs) show that consumer spending on credit cards was £122bn in 2005, but last year fell to £120bn. This is the first drop in credit card spending since the 1960s when cards were first launched in the UK.
According to Apacs the increase in personal debt has made consumers more cautious when using credit cards and people are now more likely to pay off their credit card bills. Outstanding debt on credit cards dropped throughout last year. The highest level was £58.3bn in January but this had fallen to £54.9 by December.
In contrast spending on debit cards is becoming more popular and rose to £195.7bn last year. This was an increase of 15%. When using a debit card the consumer is drawing money from their bank account so cannot build up a debt. In fact spending on debit cards has been greater than on credit cards since 2001. In 2005 debit cards were also used more than cash.
However, credit cards are likely to remain popular with many people. Internet shopping is increasing rapidly and Apacs figures for the Christmas period show that credit cards were used for more than half of all online spending.
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