In the past it was common to turn to the plastic in our wallets to fund festive spending. This is still true today, but now we are more likely to fish out our debit cards than our credit cards, with debit card spending in December 2014 significantly outstripping that of credit cards.
According to research by the UK Cards Association, spending on cards overall is at a high with the number of card transactions in December topping one billion for the fifth consecutive month. However, the majority share, with over three-quarters (77%) of this total, came from spending on debit cards, which equates to 806 million purchases. Credit cards, on the other hand, only accounted for 244 million transactions.
Over the year to December 2014, debit cards recorded impressive growth, with spending rising 7.2% annually to a staggering £34.5 billion. Meanwhile, credit card spending recorded a much more muted growth rate, with a year-on-year increase of 4.4% to £14.6 billion.
Commenting on the results, Richard Koch, head of policy at The UK Cards Association, said: "Driven by the rise in online spending and the switch away from cash, we've seen a steady increase in card spending over the last couple of years – but it's clear that debit cards have been leading the way and December was no different."
Clearly, the tide has turned in favour of cards that are directly connected with current accounts, but why have we started to favour this form of card spending?
Well, one possible reason could be the rise of contactless card payments, which can now be used for purchases of up to £30. Indeed, additional figures show that contactless payments tripled last year, with transactions of £2.32bn taking place in 2014, up from £653 million in 2013. This kind of spending is quick, easy and convenient, which may partly explain why the debit card has begun to steal the credit card's thunder.
There has also been an increase in the popularity and availability of current accounts that offer cashback on debit card purchases and other packaged deals. This again could be encouraging consumers to dig out their debit card. Also, there are now more and more current accounts that offer high interest rates provided certain conditions are met, which could further explain the popularity of debit cards.
If you still rely on your credit card, perhaps now may be the time to make the switch to a debit card for your regular purchases. However, in order to make the most of this form of spending, you need to make sure you have the best deal. By shopping around for a new current account, you can find something to suit you and your spending. Look out for cashback deals, incentives and interest rates, and see if they would benefit you. And if you fancy giving contactless payments a go, check that your new provider is signed up to the scheme.
You can start your search by checking out our current account best buys, along with our top selection of high interest current accounts.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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