How are we paying for our goods Credit card or cash?
Ever stood behind someone in a store and watched them shuffle through a stack of at least 10 credit cards? Consumers with this many cards are still in the minority, but experts say that the majority of U.K. citizens have at least one credit card and usually two or three.
Paying by Credit Card
It’s true that credit cards have become important sources of identification if you want to rent a car, for example, you really need a major credit card. And used wisely, a credit card can provide convenience and allow you to make purchases with nearly a month to pay for them before finance charges kick in.
That sounds good, in theory. But in reality, many consumers are unable to take advantage of these benefits because they carry a balance on their credit card from month to month, paying finance charges that can go up to a whopping 39 percent. Many find it hard to resist using the old “plastic” for impulse purchases or buying things they really can’t afford.
UK consumers’ love affair with plastic was confirmed after it was revealed that spending on credit and debit cards has trebled over the past decade.
In a new report, the UK payments association Apacs said spending on plastic represented just under a third of total consumer spending last year, with the remaining spend made up of cash, automated payments and cheques.
Plastic transactions increased to a record £321bn, exceeding spending made with cash by £47bn. Spending on debit cards exceeded that on credit cards by £69bn.
Experts expect plastic spending to account for 89% of growth in UK payment volumes by 2016.
“The last 10 years have seen a rapid rise in the popularity of plastic, with debit cards showing particularly strong growth,”.
“Consumers enjoy the ease and convenience plastic cards bring, and today most retailers and supermarkets take plastic, as do an increasing number of professional service providers.”
Use of debit cards has gone up more than fivefold since 1996, while spending on credit cards has nearly trebled, although there has been an overall decrease in the use of credit cards over the past 12 months.
Cash spending has increased 17% over the same period while cheque use has dipped by 7%.
The increased reliance on plastic has been blamed for the UK’s rising mountain of consumer debt.
View the best credit cards available with this UK credit card comparison service. See who offers the best deals including 0% rates on purchases and balance transfers and make a credit card application online.
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