CashNews.co
As consumers in the UK and beyond continue to turn to credit and debit cards as their first payment method, more and more also find themselves in debt, according to new findings.
The data comes from UK Financethe collective voice for the banking and finance industry, which has released insights into card spending in the UK.
It found that there were 2.21 billion credit and debit card transactions in May in the UK, 2.2 per cent more than in the previous year, showing that the most popular payment method continues to grow.
As expected, contactless payments appear to be going from strength to strength, accounting for 65 per cent of all credit card and 77 per cent of all debit card transactions. In total, there were 1.65 billion contactless card transactions in May, 3.7 per cent more than the 1.59 billion in May 2023.
The total value of contactless transactions was £26billion in May, a 6.1 per cent increase on £24.5billion in May 2023.
Credit card debt is on the up
However, UK Finance also found that outstanding balances on credit card accounts have grown by 8.5 per cent over the twelve months to May and 48.9 per cent of outstanding balances incurred interest compared to 49.7 per cent in May 2023.
Michelle Stevenscredit expert at personal finance comparison site finder.comdiscussed the findings: “The latest figures show that credit card debt in the UK continues to climb, reflecting the ongoing cost of living pressures. With outstanding balances growing, it’s clear that consumers are increasingly relying on credit to make ends meet.
“What’s particularly concerning is that nearly half of these balances are incurring interest. This suggests that a significant portion of cardholders are struggling to pay off their debts in full each month, potentially trapping them in a cycle of high-interest payments.
“For those finding themselves in this situation, a minimum card payment calculator _can help consumers compare different repayment options and see how increasing their monthly payments, even slightly, could significantly reduce the time and interest paid on their credit card debt.
“For example, using UK average numbers, paying £50 a month versus the minimum amount (at 2.5 per cent, initially that would be £33) on a balance of £1,316 could have you debt-free in just over three years versus 10 (and save you £1,681 in interest). Taking advantage of a zero per cent balance transfer deal, giving you a fixed interest-free period of up to 30 months, could result in further interest savings.”