Credit cards Updated:
Credit card use dropped off last year, as more people found alternative ways to access finance.
Although the spectre of the credit crisis has prompted many people to pay down their unsecured debts, credit card borrowing has declined at an even faster rate, according to PricewaterhouseCoopers (PwC).
Total outstanding credit card debt fell by 5% last year, leaving the average card balance at around £1,000.
It continues a trend of credit cards losing market share to other payment types, especially debit cards which grew by 10% last year and became the most used payment method over cash last year.
PwC said that credit card use has also been hit by scrutiny from regulators in recent years, while consumers who do want to borrow are often rejected because of harsher criteria.
Simon Westcott, director of PwC, said that 45 years after first being introduced, credit cards are suffering a 'midlife crisis.'
"Consumers discarded nearly one million cards in 2011, taking the number of credit cards in circulation down to levels not seen for almost a decade," he added.
"The longer term trend suggests that numbers will continue to decline, with the younger generation showing a preference for debit cards and emerging digital alternatives such as mobile payments.
"This generation seems unlikely to switch to increased credit card usage in later life, as perhaps they would have done in the past, suggesting that debit cards, mobile payments and other innovations will force the credit card into an ever decreasing market."
Evidence also shows that consumers are increasingly looking to alternative credit streams, especially in the case of payday loans.
Compared with complicated applications for credit cards, the lending is considered to be convenient and innovative, it has been warned, and the success of payday loans could act as a springboard for providers to launch other financial products.
"Mainstream lenders need to be aware that what may have begun as a last resort, could be an enduring relationship as consumers are pleasantly surprised at the convenient and innovative service they receive from these smaller, more agile providers" said Mr Westcott.
"As these providers become more conventional, we are likely to see them venture further into the mainstream market with their own credit-card, longer term loan products or even current accounts."
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