Yahoo Finance Debit card spending soars to record high as UK avoids credit card debts
UK shoppers reached for their debit cards at record levels in July, avoiding debt from credit card spending as the pandemic continued to bring economic uncertainty.
Debit card spending jumped by almost a fifth (18%) to a high of £59.1bn ($76.4bn) from the previous month, and rose 9.4% compared to July last year, new data from UK Finance showed.
Meanwhile spending on credit cards tumbled 24.8% to £15bn from a year ago suggesting that consumers are shying away from mounting debt during the pandemic and avoiding high-value purchases.
Eric Leenders, managing director of personal finance at UK Finance, said credit card spending “continues to be impacted by ongoing economic uncertainty and fewer opportunities to spend on high value items such as holidays.”
“The banking and finance industry’s clear plan continues to support customers during this difficult time, as we work closely with the government and regulators to ensure people can pay in a way that suits them,” he added.
READ MORE: Barclaycard data reveals surge in UK consumer spending
As the nation dealt with lockdown restrictions and social distancing measures, online shopping continued to boom. The value of card spending online hit a record high of £21.8bn.
Some 41% of total card spending by value took place online during the month, up from 30% in February, but down from a high of 46% in April.
The average value of a contactless payment was £12.08 during July, up from £9.42 in February, following the introduction of the new £45 contactless payment limit introduced by the banking and finance industry earlier this year.
Contactless card spending amounted to £8bn in July, up 22.5% from the previous month and an 11.1% increase compared to last year.
As the economy slowly opened back up, more retailers also encouraged consumers to use card or contactless payments where possible to avoid the spread of the virus via physical money exchanges. This was also likely to boost the use of debit card spending.
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