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: โWeโre becoming a nation who shuns debt and sticks to debit cards instead. Over the past two years weโve 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%.
โThe 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 donโt need to put spending on their credit cards, as they have sufficient spare cash to pay for stuff. As a nation weโre continuing to pay off our credit card debt too, with total balances on credit cards dropping by 7% in the past year as weโve paid off more than we spent.
โHowever, 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 ยฃ60.5bn, around ยฃ11bn higher than two years previously. Some of this will be essential items people werenโt 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.
โBut it seems thereโs 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 โ suggesting they exceed the current ยฃ45 limit. Contactless payments have soared in the past two years, as the limit was raised from ยฃ30 last year, and this will no doubt leap again when the limit jumps to ยฃ100 next month.โ
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