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Debit cards beat cash

Debit cards beat cash

Category: Money

Updated: 30/06/2011
First Published: 30/06/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

People are increasingly shunning cash in favour of their debit cards, the Payments Council has revealed.

Cash lost the top spot as the consumer's payment method of choice in 2010 for the first time.

By the end of last year, £26 billion more was spent on debit cards than in notes and coins, equivalent to approximately £10,001 for every household in the country.

The latest figures for the first quarter show the gap continuing to widen as people continue to opt for plastic over notes and coins.

People shelled out £39 billion on the high street with debit cards in the first three months of the year - more than twice the amount spent on credit cards (£17 billion).

And spending on debit cards soared at the petrol pumps, as the cost of fuel spiralled upwards.

Motorists spent almost £900 million more on fuel in the first three months of 2011 than they did from January to March 2010 - an increase of 18%.

By the end of 2011, total debit card spending for the year could reach £320 billion.

But the use of physical money has levelled out, with cash machine withdrawals – which account for a significant part of the cash we spend – plateauing at £44 billion, down 0.3% from the same period last year.

We are also reluctant to use our credit cards, as spending in January to March 2011 was just 1.5% higher than in the same period last year, a decline in real terms, way behind the 10.1% rise in debit card spending

Meanwhile, cheque usage fell dramatically as consumers and businesses sought quicker, more convenient ways to pay. In the last three years, cheque usage has fallen just over 30%.

There is no let up in this trend, partly contributed to by retailers declining to accept them and partly due to alternatives, such as electronic payments, eating into the cheque's share in areas like person-to-person and person-to-business payments.

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