UK Finance: Credit card spending fell 50 per cent in first month of lockdown

  • Significant fall in credit card spending in April amid uncertain economic outlook, but debit card usage remained broadly in line with previous months
  • Record proportion of card payments made online in April as lockdown restrictions mean more consumers shop from home
  • The average value of a contactless payment exceeds £10 for the first time

The value of credit card transactions in April dropped to £8.7 billion, half the value compared to April 2019, UK Finance data reveals. In the first full month of social distancing measures the number of credit card transactions by UK cardholders also witnessed a sharp fall of 45.9 per cent to 163 million, the lowest level in over nine years, as borrowers cut down on credit card spending in the face of the coronavirus pandemic.

In comparison, expenditure on debit cards remained robust. Whilst the number of debit card transactions in April 2020 was 5.1 per cent lower than the previous year, the total value of these transactions rose by 0.9 per cent to £51.8 billion. This suggests some consumers may be acting more cautiously amid the current economic uncertainty and choosing to spend on their debit rather than credit cards.

Outstanding balances on credit cards fell by almost £4.7 billion in April 2020, the largest monthly fall in over a decade, as many people opted to make repayments rather than spend on their credit cards. This follows a £3.1 billion fall in outstanding balances on credit cards in March 2020.

Reduced opportunities to spend in shops due to the Covid-19 lockdown also led to a record proportion of card transactions being made online in April. Whilst total card spending fell, one third (34.3 per cent) of the total value of debit and credit card transactions was made online, up from 29.6 per cent the previous year. Similarly, 16 per cent of the volume of card transactions was through online purchases, an increase from 13.3 per cent in April 2019 and the highest monthly figure on record.

Contactless card spending saw a notable drop in April with 404 million transactions in the UK, a 44.3 per cent reduction from 725 million the previous year and the lowest monthly figure since February 2017. The total value of all contactless transactions was £4.1 billion, a 40 per cent decrease from £6.8 billion in the same month in 2019. This fall is likely to have been impacted by reduced opportunities to spend in the retail, transport and hospitality sectors. April was also the first month when the average value of a contactless payment surpassed £10. This may be a result of fewer low-value transactions, such as on public transport where contactless cards are often used for payment. The industry raised the payment limit on contactless cards to £45 from 1 April, to support consumers who choose to pay using contactless at this time.

Eric Leenders, Managing Director of Personal Finance, UK Finance, said:

The Covid-19 crisis has significantly changed how, where and when people spend their money.

?The banking and finance industry has put in place a number of measures to help customers adapt to this new economic environment and pay in a way that suits them. This includes increasing the contactless limit to £45 and offering deferrals on credit card repayments.

?As the economy begins to open up, the sector will continue to support customers to help them through this difficult time.

Notes to editor

<ol><li>For more information please call the UK Finance Press Office on 020 7416 6750 or e-mail <a href=""></a>.</li&gt;
</ol><ol><li value="2">UK Finance is the collective voice for the banking and finance industry. Representing more than 250 firms across the industry, we act to enhance competitiveness, support customers and facilitate innovation.</li>
</ol><ol><li value="3">Data tables from UK Finance's Card Spending Update for April 2020 are available <a href="…;
<li>The banking and finance industry has put in place a clear plan to help Britain through</li>
</ol><ul><li>1.9 million <a href="… payment deferrals</a></li>
<li><a href="… million interest-free overdrafts</a> offered, 992,400 payment deferrals on credit cards and 686,500 payment deferrals on personal loans.</li>
<li>£46 billion of lending to over 1.1 million businesses through government Covid-19 lending schemes</li>
<li>Protecting customers from <a href="… and fraud</a></li>
<li>Higher limit for<a href="…; contactless payments</a></li>
</ul><ol><li value="5">UK Finance has published comprehensive <a href="…; for self-isolating financial services customers seeking to pay for essential goods. The guidance outlines all the ways a customer can pay safely, with specific guidance for the self-isolating or those assisting people at increased risk. It includes industry standard processes as well as new developments to help customers to access cash.</li>
</ol><ol><li value="6">Please note that data on UK cardholders is different to data on card activity in the UK. Data on UK cardholders refers to transactions made either inside the UK or overseas on cards issued to UK residents and reported by card issuers. Data on card activity in the UK refers to transactions made in the UK only, both on UK-issued cards and cards issued overseas, this data is provided by acquirers.</li>
<li>A summary of our annual UK Payment Markets 2020 Report containing detailed analysis of the use of all types of payments in the UK, can be found here: <a href="…;
<li>The quarterly Household Finance Review containing analysis and economic commentary on household finance in the UK, can be found here: <a href="…;
</ol><ol><li value="9">The monthly credit card data has been re-stated back to January 2019 to increase our market coverage to 97 per cent providing a more representative picture of the credit card market.</li>