British credit card spending shows that consumers are not falling behind in their ability to manage repayments, a reassuring trend in the eyes of UK Finance.
The UK financial industry trade body released its card spending data for February 2024 today, revealing a slight increase in both debit card and credit card transactions.
Debit card spending rose 6.7% year-over-year to over two billion transactions for a total spend of £60.9bn, 0.5% higher than February 2023. Meanwhile, there were 329.8 million credit card transactions totalling £18.8bn, a respective increase of 8.6% and 8.9%.
These credit card payments drove an accompanying rise in outstanding balances by 9.5% over the past year, with a slight decline in outstanding balances incurring interest compared to 51.2% in February 2023.
These figures come at a significant time for the UK economy, with the Bank of England recently voting to hold the interest rate at 5% – more than double its ideal rate of 2%.
This has meant that living costs, and particularly costs of goods, have remained high. However, UK Finance is still reassured by the fact that balances incurring interest had not risen.
Janine Randolph, Head of Data Management at UK Finance, said: “Growth in credit card balances outstanding was largely unchanged in the year to February, but the volume of balances incurring interest fell a little during the same period.
“This partly reflects the continuing rising cost of goods and, reassuringly, means we haven’t seen signs of a fall in consumers’ ability to manage their credit card repayments.
“Consumers worried about repaying their credit card bill should get in touch with their lender early to discuss the options available for help.”
High inflation and living costs, as well as an economic downturn in late 2023 – revealed earlier this year – has made credit payments more common in the UK. Buy now, pay later (BNPL) payments have also risen in use as many Brits find their wallets increasingly squeezed.
Also, the Nationwide Building Society has reported an increase in cash usage, a reversal of the physical-digital transition seen in recent years, due to some consumers finding it easier to budget with physical cash.