Debit card spending soars by 37%

Its Card Spending Update, which covers the monthly value and volume of transactions across debit and credit cards, found that annual data comparisons have been impacted by lockdown restrictions and the re-opening of the economy.

UK Finance said this led to large percentage variations from January 2021 and included figures from January 2020 for context.

The total spend from UK cardholders both in the UK and overseas was £57.4bn – 14.8% higher than January 2021 and 3.4% more than the same month in 2020.

The survey further said there were 349.7 million credit card transactions in December 2021, which was 19.7% more than December 2020, and 1.9% higher than pre-pandemic December 2019.

The total credit card spend of £17.3bn was 17.9% higher than December 2020, but 5.6% lower than in the same period for 2019, and outstanding balances on credit card accounts have grown by 3.8% over the twelve months to January 2022.

Card transactions made in the UK by cardholders from both the UK and overseas countries saw a sharp rise, with 1.7 billion debit and credit card transactions in the UK in January, 42.8% more than January 2021 and 9.2% higher than January 2020.

The total spend of £66.1bn was 24.3% higher than January 2021 and 11.3%  higher than January 2020.

Contactless payments accounted for 55% of all credit card and 69% of all debit card transactions.

There were 1.2 billion contactless card transactions in January, 78.7% more than the 645 million in January 2021 and 31.2% more than the 878 million in January 2020.

The total value of contactless transactions was £16.3bn in January, a 102.9% increase on £8bn in January 2021 and 97.2% increase on £8.3bn in January 2020.

The number of contactless credit card transactions was 112.8% higher than January 2021 and 17.9% higher than January 2020.

The number of contactless debit card transactions was 74.5% higher than January 2021 and 33.5% higher than January 2020.

Helen Morrissey, senior pensions and retirement analyst at financial services firm Hargreaves Landown said: “Today’s data shows further signs the pandemic savings boom is unravelling with outstanding credit card balances on the rise after months of decline.

“Subdued spending habits during the pandemic meant we could put more away for a rainy day and we were less likely to put purchases on the plastic and not pay them off in full”.

Morrissey further warned that “the concern is that these outstanding balances are also a sign that the rising cost of living is starting to bite. We are increasingly having to burn our way through our lockdown savings to meet everyday expenses and using our credit cards more to fill any gaps”.