Credit card purchases fall 3m from 2009 to 2010


Consumers are learning to manage their credit cards more efficiently, new figures suggest. The latest report from the British Bankers' Association (BBA) indicates that shoppers are doing their best to avoid high interest rates and charges, while also taking steps to reduce their balances.


Figures point to savvier card use
The number of card purchases fell from around 165m in September 2009 to 162m in October 2010, showing that consumers have become slightly less reluctant to borrow in order to spend. Meanwhile, the average amount spent per purchase has fallen to £64, although this figure is likely to have risen during November and December, as more than half of people responding to a recent Consumer Intelligence poll said that they planned to use their credit cards to fund their Christmas spending.

As well as reducing the number of transactions they make, credit card customers appear to be cutting back on costly cash withdrawals. Whereas a debit card can typically be used to withdraw cash at an ATM without charge, credit card providers tend to charge for this service, as well as applying higher interest rates for money borrowed in this way. Britons seem to be waking up to this fact, with the figures showing that the size of the average cash withdrawal has fallen by 21% to £136, while the overall number of cash withdrawals has dropped by around 18%.

Debt repayment a priority
The BBA figures also suggest that Britons are making a greater effort to reduce the size of their credit card balances. Overall, card debt fell by £281m during October. This has brought total credit card debt for the country down to £60.4bn, which is the lowest it has been since August 2004. Furthermore, nearly a third of this figure does not incur interest.

David Dooks, BBA statistics director, summarised the findings, saying: "Consumers regularly repay more than they spend, and cards are used much less to withdraw cash than they were a year ago."

See related: Online credit card spending averages £192 a month, Britons careless with credit card pins

Published: 10 December 2010