Spending on credit cards falls for the first time
Credit card spending fell for the first time since they were launched in the 1960s, with increasingly cautious consumers unwilling to take on more debt and more willing to compare credit cards.
The Association of Payment Clearing Services (Apacs) released figures that showed that credit card spending dropped from £122bn in 2005 to £120bn in 2006, a 2% fall.
There was also evidence that people were taking more time to compare credit cards, so that they get a cost-effective deal from their product.
However, spending on debit cards rose by 15% in the same period to £195.7bn, bringing the total amount of personal indebtedness in the UK to £1.29 trillion.
Of this, £1.08 trillion was in the form of mortgages and £213bn accounted for by consumer credit, such as credit cards, bank loans and HP agreements.
Surprisingly, outstanding credit on credit cards fell back during the year, dropping from a high of £58.3bn in January 2006 to £54.9bn in December. People were also taking more time to compare credit cards.
An Apacs spokesperson said: “People are increasingly paying off their credit card spending, showing they are becoming a bit more prudent.”
Spending on debit cards overtook cash for the first time in 2005, with £89bn spent in shops and online, compared to £81bn changing hands in notes and coins.