Credit card use declines as payday loans take off
According to a report published by accountancy firm PriceWaterhouse Coopers, increasing numbers of UK consumers are turning to debit cards, digital payments and payday loans instead of credit cards.
Nevertheless, the average credit card balance remains at about £1,000. UK consumers have total average debt of £7,900.
The report claimed that debit card use increased by 10% in 2011, while many people – especially the younger generations – were happy to use digital payments, such as using their mobile phone.
“The challenge for banks is how to sustain market presence in the face of competition from ambitious giants and other new entrants,” the report said.
This could include a return to annual fees for credit cards, the PwC suggested.
“With banks expected to further tighten lending conditions, we expect the shift towards alternative lenders to continue unabated.”