UK Credit card spending restrained
July 23rd, 2011
The British Retail Consortium (BRC), which represents 90% of the UK’s shops and shopkeepers, this week said that credit card use fell last year as people turned to cash and debit cards to avoid borrowing.
The figures show that the number of transactions involving credit cards dropped 12.9%. The number of transactions involving cash also fell, although the average amount spent rose by 13% to £12.93. Debit card use jumped by 15.8%.
The BRC criticised the level of bank charges associated with credit cards, pointing out they are the most expensive payments they have to process.
On average in 2010, each retailer paid 1.7p per cash transaction to have the money transported and banked. The BRC said that the average charge for processing a credit card payment was 37.1p, compared with a debit card average of 9.2p.
Credit cards were used in just 10% of all transaction, but accounted to more than 44% of processing costs.
The BRC added that cash was the quickest way to pay. Using physical money took an average of 27.2 seconds, it said, compared with an average 39.4 seconds for a card payment.
The BRC’s annual Cost of Payment Collection Survey includes results from nearly eight billion transactions in store and online, 60% of the UK’s annual retail sales.
Retailers reported fraud losses had fallen by 37% compared with 2009 after investment in technology, such as the latest secure card readers, new levels of internet security and note checkers at tills.
The general trend with consumer spending is that hard-pressed customers are switching to cash and debit cards for the reassurance that they can’t spend what they haven’t got. This is why the use of credit cards has dropped sharply and cash still remains king, used for more than half of all retail payments.
It remains to be seen if this trend continues as the economy continues, but for now it seems that people are taking a much more sensible approach to their spending and levels of debt. Let’s just hope that these habits stick this time.
This entry was posted on Saturday, July 23rd, 2011 at 4:54 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.