How the lockdown influenced our credit card habits
Did you spend a lot less money at the start of the lockdown?
Newly published figures show a significant fall in the value of credit card transactions in April.
Total transactions in the UK fell to £8.7 billion for the month, at around half the amount spent on plastic a year earlier.
The data from UK Finance shows the number of credit card transactions fell by 45.9% in April, to 163 million.
This is the lowest level of monthly credit card transactions in more than nine years.
By way of comparison, spending on debit cards at the start of the lockdown remained robust.
The number of debit card transactions fell by 5.1% in April compared to a year earlier, but the total value of these transactions rose by 0.9% to reach a total of £51.8 billion.
This fall in credit card spending and rise in debit card spending suggests we are all being a little more cautious about our short-term borrowing to fund spending.
The data also shows that outstanding credit card balances fell by £4.7 billion in April. This fall in outstanding balances is the most significant in more than a decade, as Brits switched from credit card spending to credit card repayments.
There was also a fall in credit card outstanding balances in March, falling by £3.1 billion.
Unsurprisingly, many of the card transactions in April took place online, with fewer opportunities to visit the shops.
More than a third of the total value of debit and credit card transactions happened online in April, up from 29.6% a year earlier.
Another victim of closed shops in April was contactless card transactions, falling by 44.3% in April to reach the lowest level since February 2017.
The total value of all contactless transactions was £4.1 billion, a 40% fall from £6.8 billion in the same month in 2019.
Despite a fall in contactless transactions, the average value of these transactions rose above £10 for the first time, with fewer low-value transactions happening.
On 1st April, the card payment industry raised the payment limit on contactless cards to £45 per transaction, which also helped to push up the average transaction value.
Eric Leenders, Managing Director of Personal Finance, UK Finance, said:
The Covid-19 crisis has significantly changed how, where and when people spend their money.
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.