Which? uses cookies to improve our sites and by continuing you agree to our cookies policy

Brits fall out of love with credit cards

Debit card use rockets while credit cards decline

Credit card pointing at camera

British consumers have increasingly moved from credit to debit cards over the past decade, but could be losing valuable protection as a result

A new report from The UK Cards Association shows dramatic changes in the way British consumers use their debit and credit cards over the past decade.

A decade of two halves

During the first half of the decade (2000 to 2005) 22.8m new credit cards were issued, increasing the number from 47m cards in 2000 to 70 million in 2005. The amount of debt outstanding on credit cards almost doubled to £68bn in 2005, while credit card spending grew by 50% and debit card spending by 125%.

By the end of the decade the number of credit cards had fallen to 55.6 million and outstanding balances were £10 billion lower. In 2009, the year of sharpest reduction, almost one in eight (7.8 million) credit cards were cancelled.

From 2005 onwards, two million more consumers decided not to use their card for borrowing, paying off their balance in full each month instead. This trend has continued – last year, 62% of cardholders paid in full each month, compared with 55% in 2005, with the over-45 age group accounting for much of the change.

Growth in debit card usage

By contrast, consumers’ spending on debit cards almost doubled from 2005 to 2010, fuelled by a move away from cash and increasing use of debit cards for smaller value transactions.

Over the whole decade, an extra 35 million debit cards were issued, bringing the number in circulation to 84 million by 2010. Those cards were used three times more often than credit cards last year (6.5 billion compared to two billion) to spend a total of £299 billion – almost four times more than was spent on debit in 2000 (£77 billion).

Credit cards can offer excellent value

Which? credit expert Martyn Saville commented: ‘In the uncertain economic climate of the past few years, it’s unsurprising that many consumers have been reducing the amount they owe on their credit card. High credit card interest rates, coupled with providers’ unwillingness to lend, have combined to dampen public enthusiasm for credit cards.

‘And yet, there are strong reasons to use a credit card, whether it’s to earn rewards and cashback, spread the cost of a major purchase with a 0% deal or to enjoy the protection you get under Section 75 of the Consumer Credit Act. The important thing is to choose the best card to match your circumstances.’

More on this…

Back to top