Latest stats dispel myth of credit card fuelled Christmas shopping
– No spike in credit card spending as shoppers use cards prudently in busy festive period
– Credit card growth rate in November actually lower than yearly average
Shoppers in the build up to Christmas were much more inclined to spend on their debit card rather than their credit card, dispelling the myth that consumers were getting in to debt to fund their festive celebrations.
In November, which included the highest spending day of the year (Black Friday, Nov 28) £34.4bn was spent on debit cards, compared with £14.1bn on credit cards. There was no rush to spend more on credit cards, in fact the rate of growth on credit card spending was just 4%, well below the average 4.7 % rate of increase since the start of the year. Debit spending rose 7.4%.
The volume of transactions paints a similar picture. There were 799m debit card transactions made in November, compared to the much smaller 241m credit card payments made. Interestingly, the pace of growth on both debit and credit card spending has continuously decelerated since April when it peaked at 7.5%. In fact, for this month, the annual growth rate for card transactions was 6.4% – the lowest level in fourteen months.
Richard Koch, head of policy at The UK Cards Association, said: “There is a popular myth that people splurge on their credit cards in order to pay for Christmas but our figures show that the reality is really quite different. Shoppers would still much prefer to pay using their debit card and there has been no spike in credit card spending as some commentators had predicted. In fact, four out of every five people now pay off their credit card in full every month and therefore are not charged interest.”
Spending by sector
The key movements to note are:
– Spending on hobbies, toys and games increased by 50% in the build up to Christmas.
– Spending on music records was up over 30%, whilst there were smaller, but significant increases for sweet shops, gift shops and jewellers.
– Card spending in the retail sector increased by £134m to £23.7bn.
– Card spending in the services sector increased by £283m to £24.9bn.