Credit card balances fell 15.7% in year to November – UK Finance

Outstanding balances on credit card accounts fell by 15.7% in the year to November 2020, the fourth successive month in which repayments outstripped borrowing, new UK Finance figures have revealed.

The banking body confirmed this was the largest drop over a 12-month period since the pandemic began.

UK Finance attributed the trend to people choosing to pay off debt and a reduced usage of credit facilities.

In total, 1.5 billion debit and credit card transactions were made in the UK in November, reaching a total value of £58.8bn. This reflected a drop of 11.6% in the number of transactions compared to October, and was 12.4% fewer than in November 2019, reflecting an overall decline in spending as people adjusted to the new coronavirus restrictions.

The latest card spending data published by UK Finance also showed that online card spending accounted for 38% of the total value of credit and debit card spending in the UK last November.

The banking body revealed this total amounted to £22bn and represented a climb from 33% in October, to reach a proportion not seen since the first lockdown. The average value of online transactions crept up to over £82 compared to £73 in November 2019, as larger purchases moved online.

Figures also showed that the number of contactless payments dropped sharply month-on-month, declining by 17.6% compared with October, as people remained at home due to lockdown restrictions. The total value of contactless transactions was £9.9bn during November, which was a 17.2% decrease from October. However, this figure was a 43.7% increase on November 2019, as people continued to take advantage of the higher £45 payment limit.

UK Finance managing director of personal finance, Eric Leenders, commented: “Last November saw stricter coronavirus restrictions put in place across the country, just as the Christmas shopping season kicked off and the Black Friday sales arrived.

“This led to a rise in the share of online card spending, reaching levels not seen since the first lockdown, while contactless spending fell as people remained at home and reduced their travel.

“Meanwhile the trend of people choosing to pay off credit card debt or make less use of credit card facilities continued as repayments outstripped lending for the fourth month in a row.”

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