News & Views - Savantor

Spending trend on the increase

Monday, 30 September 2013

Households' personal and credit card debts rose last month for the first time in four years on the back of surging consumer confidence. Figures from the British Bankers Association (BBA), showed that annual borrowing on personal loans and credit cards grew for the first time since 2009. However, despite the increase in consumer credit, households appear to be as keen as ever to get on top of their debts. Meanwhile, the total amount still owed on credit cards continues to grow, reaching a record high of £38.7bn.

The fresh appetite for consumer credit was taken as a sign of improving confidence. The level of unsecured borrowing grew by 0.3% over the year driven by a 6.7% rise in card borrowing and a 5.1% increase in personal loans and overdrafts. Net consumer credit between July and August grew by £100m to £80.1bn. Some £8.4bn of new spending was recorded on credit cards, while £8.3bn of repayments were also made. The latest figures from UK Card Association show:

Debit cards

·         91% of the UK adult population have a debit card. There are now almost 47 million card holders

·         Debit cards were used to make 7.7 billion purchases in the UK to a value of £337 billion

Credit cards

·         61% of the UK adult population have a credit card. There were just over 30 million credit cardholders

·         81% of all credit and charge card spending in 2012 was made by cardholders who repaid the balance in full. Around 40% of outstanding credit card balances bear 0% interest or are repaid in full each month

Contactless Cards

·         32million cards in circulation in the UK

·         120 contactless transactions per minute in March 2013 which is predicted to rise to 300 transactions per minute at the end of 2013.

While the improved economy is encouraging consumers to loosen their belts, they are still showing caution when it comes to essential purchases. The latest figures from Barclaycard have revealed that while consumer spending has increased in some areas, including restaurant (+13.3%), cinema and theatre spending (+8.1%) and hotel spending (+6.7%), consumers have actually cut back in several areas of everyday spending including clothing (-0.6%) and groceries (-0.1%).

 

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