Credit cards Updated:
When you're at the till, do you instinctively reach for the cash, or your debit or credit card? Chances are, cards could be leading the way, with a growing number of people choosing this method of payment over traditional means.
According to figures from The UK Cards Association, the number of debit and credit card transactions grew by 1.1% during May to total a whopping 1.093 billion, which shows just how much we've come to rely on the trusty plastic.
As for the value of those transactions? Well, total card spending rose to £51.1 billion, an increase of 0.8% on a monthly basis. Debit cards made up almost three-quarters (71.4%) of that card spending, amounting to £36.5 billion during the month. However, the average value of a card transaction dropped to £46.92 in May, down by over £1 compared with this time last year.
This amount has fallen consistently since 2011, the report noted, but this could arguably reflect the increased use of contactless cards (and the lower payment limit associated with it), as well as the ongoing migration from cash payments to cards for low-value purchases. There's no longer the need to fish out a few pound coins when you're buying something – these days, cards can be just as convenient.
"The latest statistics from the UK Cards Association reveal the increasing popularity of plastic over cash," said Rachel Springall, finance expert at Moneyfacts.co.uk. "Thanks to the spread of contactless payments, using the plastic has never been so simple, and with many providers offering a mobile app or online facility to repay debt, it's no surprise that consumers increasingly prefer to use their credit or debit card to make payments."
The growth in online transactions could also have a part to play in the rising level of transactions. During May, consumers made a total of 124 million online purchases, up 1.5% from April's figure, and they spent a total of £11.2 billion. In fact, internet spending represented over a fifth (21.8%) of total card spending during the month, with this form of shopping becoming increasingly popular.
This is perhaps unsurprising, added Rachel, particularly for those who use credit cards for their online shopping needs. "Paying by credit card offers protection from fraud as individual payments of £100 or more will be covered by Section 75 of the Consumer Credit Act, and more and more consumers are becoming wise to the advantages of using their credit cards in this way."
It's largely predicted that the growth in card spending could continue, particularly given that the contactless payment limit is set to rise from £20 to £30 in September. This will encourage more people to make faster payments at the checkout, said Rachel, but she urges consumers to remain sensible.
"As with any spending, consumers should keep a close eye on their transactions and ensure that any credit card debts are paid before interest applies," as otherwise, any benefits you'd have gained from the convenience of card spending will be completely wiped out by the extra amount you'll have to pay.
Alternatively, if you won't be able to pay off your spending in one go, why not take advantage of an interest-free credit card? This can give you some breathing space while you tackle your debts, and can ensure you're not spending more than you need to, no matter how you go about it.
Remember, in order to secure a mortgage, credit card or personal loan you need to have a good credit rating. To find out if yours has a clean bill of health, contact a credit check provider, such as Experian CreditExpert to investigate your credit report.
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.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.