The amount spent on credit cards in the UK is up by one per cent to £124.1 billion (from £122.8 billion in 2004) whilst the number of transactions has fallen by one per cent to 2.1 billion, according to a report by APACS, the UK payments association.

While cardholders rein in their spending, they are concentrating on repayments. Bank of England figures reveal the highest proportion of repayments since 1998 – 95.3 per cent.

The report also reveals that the number of cardholders who repay their credit card in full each month has grown to 59 per cent from 56 per cent in 2004; and an increasing number of cardholders are making repayments by direct debit.

Sandra Quinn, director of communications at APACS says: “Our figures show that UK credit cardholders are reining in their spending and concentrating on repayments – a trend which has continued throughout this year. In fact the latest figures released by the Bank of England in September 2006 show credit card repayments overtaking spending for the first time. Nervousness about economic growth could well have contributed to the reduction in credit card spending and higher repayments, alongside media speculation about whether consumers are borrowing responsibly.”
The report goes on to reveal that debit cards continue to be the UK’s most popular plastic card in terms of ownership and use. Over the year:

Debit card spending in retail outlets exceeded cash spending for the first time ever. The figures show debit card spending at 37 per cent (£89 billion) of the total £240 billion spent, against cash at 34 per cent (£81 billion).

In 2005 the number of personal debit cardholders increased by three per cent to reach 40.8 million.

The number of debit card transactions (both spending and cash withdrawals) per cardholder reached 159 – up from 77 transactions per year just ten years ago.
Quinn continues:

“Debit cards have gained ground significantly during the past ten years as the most convenient everyday payment method as consumers have moved away from using cheques and cash. However, we still prefer credit to debit when it comes to buying higher value items or buying online, as we welcome the convenience and security credit cards bring.”

The report also looks at possible futures for plastic cards. Over the next ten years debit cards are expected to be the fastest-growing way to pay in the UK and much of this growth will come as people migrate away from paying by cash for lower-value payments. With the successful introduction of chip and PIN, debit cards have become more convenient to use at point-of-sale.

The figures reveal consumers spend five times more on their plastic cards through the internet than they did just five years ago, with e-commerce accounting for five per cent of all personal card payments. This figure is rising and by 2015 internet purchases are projected to account for over 20 per cent of personal credit card payments within the UK.