- 2005 figures reveal spending on credit cards continues to level off, whilst repayment levels continue to rise

- Debit card spending continues to increase, as the amount spent on debit cards in the high street overtakes cash spending

- Number of people repaying in full at the end of each month is rising

Today (11 October 2006) APACS, the UK payments association, unveils its regular review on the highlights and trends of plastic card use in the UK revealing a shift in cardholder behaviour – spending on credit cards is levelling off whilst credit cardholders concentrate on making repayments.

The figures show the amount spent on credit cards in the UK is up by one per cent to £124.1 billion (from £122.8 billion in 2004) whilst the number of transactions has fallen by one per cent to 2.1 billion.  While cardholders rein in their spending, they are concentrating on repayments.  Bank of England figures reveal the highest proportion of repayments since 1998 - 95.3 per cent.   

The report also reveals that the number of cardholders who repay their credit card in full each month has grown to 59 per cent from 56 per cent in 2004; and an increasing number of cardholders are making repayments by direct debit.

Sandra Quinn, director of communications at APACS says:
“Our figures show that UK credit cardholders are reining in their spending and concentrating on repayments - a trend which has continued throughout this year. In fact the latest figures released by the Bank of England in August 2006 show credit card repayments overtaking spending for the first time.

“Nervousness about economic growth could well have contributed to the reduction in credit card spending and higher repayments, alongside media speculation about whether consumers are borrowing responsibly.”

The report goes on to reveal that debit cards continue to be the UK’s most popular plastic card in terms of ownership and use. Over the year:

· Debit card spending in retail outlets exceeded cash spending for the first time ever. The figures show debit card spending at 37 per cent (£89 billion) of the total £240 billion spent, against cash at 34 per cent (£81 billion).

· In 2005 the number of personal debit cardholders increased by three per cent to reach 40.8 million.

· The number of debit card transactions (both spending and cash withdrawals) per cardholder has reached 159 per year in 2005 - up from 77 transactions per year just ten years ago.

Quinn continues:
“Debit cards have gained ground significantly during the past ten years as the most convenient everyday payment method as consumers have moved away from using cheques and cash. However, we still prefer credit to debit when it comes to buying higher value items or buying online, as we welcome the convenience and security credit cards bring.”

The report also looks at possible futures for plastic cards. Over the next ten years debit cards are expected to be the fastest-growing way to pay in the UK and much of this growth will come as people migrate away from paying by cash for lower-value payments. With the successful introduction of chip and PIN, debit cards have become more convenient to use at point-of-sale.

The figures reveal consumers spend five times more on their plastic cards through the internet than they did just five years ago, with e-commerce accounting for five per cent of all personal card payments. This figure is rising and by 2015 internet purchases are projected to account for over 20 per cent of personal credit card payments within the UK.

ENDS

For further information contact the APACS Cards Information Office:
T: 0870 420 3208 E: apacs@fourcommunications.com

APACS is the UK payments association. It provides the forum for the UK's financial institutions to come together on non-competitive issues, to develop banking systems for the future and to provide innovation and developments in payments. It is also the banking industry voice on payments issues such as plastic cards, payment fraud, cheques, electronic payments and cash and is the banking organisation coordinating chip and PIN roll-out.

1. The figures cover all retail transactions in 2005 (both online and offline