Credit card spending rises year-on-year
Credit card spending rose in the year to April but the number of outstanding balances that were not cleared before interest accrued fell slightly.
UK shoppers spent £18.4bn on credit cards at home and abroad in April up 4.1% compared to the same period last year, according to industry body UK Finance.
The volume of transactions also rose marginally by 1.4% year-on-year to 326.4 million transactions in April.
Over the course of the 12-month period, outstanding balances grew by 9.5%.
The proportion of balances that incur interest, because they are not cleared up to 56 days after making a purchase, fell slightly, however, from 51.3% to 49.6%.
Debit card transactions rose by 5.1% year-on-year to £2.1bn with a total spend of £66bn (inside and outside of the UK), which is 2.1% higher than April 2022.
However, debit card spending overseas came in at £3.3bn which is a fall of 3.7%.
Samuel Mather-Holgate, independent financial advisor at Mather and Murray Financial, said: “Credit card balances grew by just under 10% in the year to April, and that’s before the effect of recent interest rate rises have been felt.
“With people struggling with colossal energy and food bills, the economy will really suffer when homeowners start coming off their fixed rates. Then the pain will really hit home. I expect unsecured credit to rise sharply over the next 12 months as the UK spirals into a debt crisis and sharp recession.
Stephen Perkins, managing director at Yellow Brick Mortgages, added: “The increased reliance on credit cards is not surprising given that households have seen every outgoing increase dramatically during the past 12 months, with incomes far from keeping pace.
“The majority of UK households lived close to their means before the cost of living squeeze, so now are living on credit in the hope of coming out the other side.”