Credit card spending halved in first month of lockdown

The value of UK credit card transactions dropped to £8.7bn in April, half the value compared to April 2019, new UK Finance data has revealed.

The banking body stated that in the first full month of lockdown measures, the number of credit card transactions by UK cardholders also saw a sharp fall of 45.9% to 163 million, the lowest level in over nine years.

By comparison, UK Finance suggested that expenditure on debit cards remained “robust”, with the number of debit card transactions in April 5.1% lower than in 2019. The data showed that the total value of these transactions rose by 0.9% to £51.8bn, and UK Finance suggested some consumers may have been acting “more cautiously” by choosing to spend on their debit rather than credit cards, amid the economic uncertainty.

Outstanding balances on credit cards also fell by almost £4.7bn in April, the largest monthly fall in over a decade, as many people opted to make repayments rather than spend on their credit cards. UK Finance revealed that this followed a £3.1bn fall in outstanding balances on credit cards in March 2020.

The data also showed that contactless card spending saw a notable drop in April with 404 million transactions in the UK, a 44.3% reduction from 725 million the previous year, and the lowest monthly figure since February 2017.

The total value of all contactless transactions was £4.1bn, a 40% drop from £6.8bn in the same month in 2019, and the banking body suggested this fall is likely to have been impacted by reduced opportunities to spend in the retail, transport and hospitality sectors.

“The COVID-19 crisis has significantly changed how, where and when people spend their money,” UK Finance managing director of personal finance, Eric Leenders, commented.

“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.”

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