Credit card spending almost halved at the height of Britain’s coronavirus lockdown, new figures show.
Data from leading banks on Tuesday showed consumers continued to pay down credit card bills in May, with everyday life on hold and enormous economic upheaval and uncertainty.
Total spending on credit cards was down 44.7% year-on-year to £9.6bn, which banks said could reflect households cutting back on “big ticket items often bought on credit.” Debit card spending was down 7.8% to £47.7bn.
The number of debit and credit card transactions also plummeted, down 39% to around one billion in May.
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Lower spending appears to have outweighed increased card use versus cash as firms and consumers have sought to minimise virus transmission risks. Separate research by Accenture published in June suggested UK cash use was declining faster than elsewhere in Europe.
The latest figures by UK Finance, which represents 250 banking and finance firms, show borrowers’ outstanding balances on credit cards dropped by 12.6% in May as they paid off debts.
Eric Leenders, managing director of personal finance at UK Finance, noted an increased £45 contactless limit had also failed to stop contactless transactions dropping by almost a third on the previous May.
“Amongst other factors, bars, pubs and restaurants remained closed and public transport was used for essential travel only,” he said.
He added: “As Covid restrictions remained in place, some customers took the opportunity to use any savings from reduced living expenses to pay down their credit card bills.”