Brits are spending more on credit cards, but owe less
Brits are playing their credit cards right according to an analysis of UK Finance figures by Hargreaves Lansdown.
At £16.9m in May, the amount UK credit card users are spending is 2.3 per cent more than the same period last year. But the total amount owed has fallen 1 per cent to £66.3bn.
There were 291 million transactions on UK cardholders’ credit cards in May 2019, 6.5 per cent more than in May 2018. But less credit card balances attracted interest in May 2019 – 53.2 per cent, down from 55.1 per cent in May 2018.
Figures from UK Finance show there are 35 million active credit card accounts in the UK at the moment, and 62 million credit cards. The annual growth rate of outstanding balances on credit cards stood at 4.1 per cent in May 2019, continuing the downward trend from its recent peak of 8.3 per cent at the start of 2018.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “We’re wedded to our credit cards: the average family in the UK owes an eye-watering £3,900 on plastic, and spent £994 on cards in May alone.
“If you play your cards right, credit cards can be an eminently sensible way to spend, and there’s every sign we’re on a winning streak. The amount we’re spending on credit cards has grown slightly over the year, while the amount we owe on them and the percentage of accounts we’re paying interest on has fallen.
“It means millions of people are spending on cards and repaying on time and in full every month. They’re benefitting from a better credit rating, extra consumer protections and possibly even some rewards.”
However, thousands of other credit card users could be developing worrying credit card habits.
Signs you need to re-consider your credit card spending include maxing out your card, using it for everyday expenses, only making the minimum repayment, using it for something you didn’t intend (i.e. using a balance transfer card for spending), and missing payments.