CREDIT CARDS

Is this the end of the credit card?

A new report shows a change of attitude in the way Brits use both credit and debit cards, as well as revealing a sharp reduction in the use of credit cards generally from 2005.

The latest report from the UK Cards Association shows that during the period between 2000 and 2005, 22.8 million new credit cards were issued. This compares to 47 million cards being issued in 2000 and 70 million in 2005.

In these ‘golden years’, the amount of debt outstanding on credit cards almost doubled to £68 billion in 2005, whilst credit card spending grew by 50% and debit card spending 125%.

In 2005 the credit card sector experienced its peak of popularity. More than two thirds of adults had one, credit card borrowing had been growing by more than 21% per year and this form of payment was used for a large number of transactions.

However, in the mid 2000s the credit card market experienced a pointed fall. During the second half of the decade credit card usage decreased markedly, while consumer spending on debit cards almost doubled from 2005 to 2010.

Sensitive cardholders

From 2005 onwards, Brits took a more cautious attitude towards money and two million more adults decided not to use their cards for borrowing, paying off their balance (in full) each month instead.

As the UK Cards Association says, this “responsible spending” trend continues today. A majority of 62% of cardholders paid their full balance each month last year, compared to 55% in 2005. The over-45 age group accounts for most of this change, according to the report.

“The UK’s passion for the convenience of plastic is alive and well, though the debit card has stolen a march on the credit card. From similar levels of usage in 2000, debit cards are now used three times as often as credit cards,” said Melanie Johnson, Chair of The UK Cards Association.

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