- Outstanding balances on credit cards contracted by 12.6 per cent in the year to May, as cardholders used the lockdown to pay down bills
- The continued uncertainty caused by Covid-19 saw card transactions down 39 per cent on May last year
- Contactless card usage rose sharply from the previous month as UK consumers and retailers sought to utilise the increased contactless limit
New data released today by UK Finance reveals that the final month of full lockdown saw the annual growth rate of outstanding credit card balances fall by 12.6 per cent in the year to May, as consumers continued to pay down their credit card bills.
May also saw credit card spending by UK cardholders slowly recover against the previous month, as the country moved past the initial shock of the lockdown, with the total value of credit card transactions rising to £9.6 billion from £8.7 billion in April.
However, the value of spending on credit cards was 44.7 per cent less than in the same month a year earlier, possibly reflecting reduced demand for big ticket items often bought on credit. Debit card transactions saw a drop of 7.9 per cent on the previous month, with a total spend of £47.7 billion. This was 7.8 per cent lower than in May 2019. Overall, card spending in the UK was down 39 per cent year-on-year, as people continued to grapple with the fallout from the Covid-19 crisis.
Retailers across the country continued to encourage customers to use contactless payments, which drove £4.5 billion of spending across 440 million transactions. This was an increase from 404 million in April. However, this is still down 39.1 per cent from the same month in 2019, as restaurants, bars and pubs remained closed and public transport was limited to essential travel only.
Eric Leenders, Managing Director of Personal Finance, UK Finance, said:
The pandemic continued to have a huge impact on how people spent their money in May, with restrictions impacting spending for both credit and debit card customers. Maintaining the downward trend over the last few months, consumers continued to pay off their credit card balances in May.
“The banking and finance industry has a clear plan to help the country through this unprecedented period and has put in place a number of measures to help customers adapt to the new economic environment including the contactless limit increase to £45 and support for those struggling with their finances. As the economy begins to open up, we anticipate spending levels to increase and the industry will continue to support customers to help them through this difficult and uncertain time.
Contact Information
UK Finance Press Team
Press@ukfinance.org.uk
