Credit card spending increases year-on-year

Credit card spending is up by 6.4% year-on-year, with a total of £17.9bn spent during July 2019 alone, recent data from UK Finance reveals.

According to UK Finance’s Card Spending update, there were 314 million credit card transactions in July 2019, which resulted in £17.9bn being spent and a 6.4% increase on the same period a year earlier. At the same time, the annual growth rate in outstanding balances on credit cards stood at 3.7% in July 2019, which a huge drop from its recent peak of 8.3% at the start of 2018. This suggests that although consumers are using their credit cards more, they are becoming better at managing their credit card debts.

Those with outstanding credit card balances could consider transferring their debt onto a 0% transfer credit card. A 0% transfer credit card provides borrowers with a 0% interest rate for a period of time, enabling them to pay off their outstanding balances quicker and with fewer payments than if interest was continued to be added to the balance.

MBNA Limited currently tops the 0% balance transfer credit card chart with its Long 0% Balance Transfer Mastercard offering a 0% rate for 29 months. It charges a 2.75% transfer fee and is only available to those with a minimum income of £14,000. Second in the chart is Halifax with its 29 Month Balance Transfer Credit Card Mastercard, which offers a 0% rate for 29 months from date of card issue. This card charges a transfer fee of 3.00%.

Darren Cook, finance expert at Moneyfacts.co.uk, said: “Customers who have an outstanding balance on their credit card should take every opportunity to pay more than the minimum repayment, particularly if they have an interest-bearing card. Credit cards do have a built-in repayment mechanism like loans and mortgages do. However, providers generally have a repayment calculator on their website or in their apps, so customers can calculate how long it will take to repay the outstanding balance when making an affordable additional repayment.”