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Card spending on the rise 3 December 2009
Steven Jackson (about the author)

The number of plastic card purchases including debit and credit card transactions rose 6.9 per cent in the third quarter and 4.3 per cent by value, figures published by The Payments Council reveal.

When broken down the figures also show that credit card spending by value fell 0.7 per cent, although the number of credit card purchases increased by 2.5 per cent in the third quarter compared to the same period last year.

The council, using figures from the UK Cards Association, Bacs, Link, Cheque & Credit Clearing Company and CHAPS Co, also stated that debit card spending by value increased by 6.9 per cent and 8.5 per cent by volume compared with the same period in 2008.

Gross credit card lending, which reflects all new spending on credit cards and includes interest, was 7.5 per cent lower than in the third quarter of last year. Reflecting this lower spending, repayments also fell but by 4.7 per cent.

Debit cards dominated non-cash spending for the first time. Previously when reviewing all payments not made by cash, direct debits and direct credits made up the greatest number. But in the third quarter debit cards accounted for 40.2 per cent of all non-cash payments, whereas direct debits and direct credits made up 39.1 per cent, when combined.

Sandra Quinn, director of communications for The Payments Council, said: "Whilst these figures provide total payment volumes cleared and include both personal and business payments, it is still possible to glean from this the average consumer’s spending behaviour.

"Contrary to reports of cardholders turning to their credit card during tough economic conditions, these statistics confirm what has been a trend for a couple of years. Spending on credit cards has remained relatively unchanged and interestingly we are still repaying proportionately more of our debt than we were three years ago. Similarly, cheque use continues to decline since its peak in 1990."

She added: "Whilst it is always difficult to anticipate next quarter’s spending, we expect consumers to continue to reach for their debit cards over the Christmas period and reduce their reliance on cash and cheques as a result."

The council’s statistics also show that cheque and credit clearing volumes fell by 13 per cent and 19 per cent by value between the third quarter of 2008 and the same three period this year.

The volume and value of faster payments rose by 11 per cent and 12 per cent respectively during the third quarter of 2009, when compared to the previous three months, demonstrating the increasing use of the new service.

This quarter, 47 per cent of all standing orders and 73 per cent of telephone and online banking payments were made using the faster payments service.

Source: Credit Today