Santander Credit Cards recently reported that average UK credit card spending declined four percent during 2011. Though the number of transactions increased by one percent, the monetary value of these transactions declined. The current economy affected luxury spending in particular, with airline charges down nine percent and travel agency purchases experiencing a 13 percent decline.
Toy and sporting goods stores witnessed the largest decline in credit card spending, a 24 percent decrease. Spending at department stores dropped by 11 percent. During the same period, some retailers and service providers experienced an increase in credit card spending.
Purchases made with credit increased by four percent at bars and restaurants. Mail order businesses saw a 22 percent increase in transactions, representing an eight percent increase in spending.
Santander Cards managing director Callum Gibson said the results were not surprising. Reductions in spending on non-essentials are typical during a struggling economy. What was unexpected was the increase in number of transactions. During 2011, consumers used good and bad credit credit cards more frequently.
This may be an indicator of just how cash-strapped many UK consumers are during these financially difficult times.
Annie Shaw, editor at CashQuestions, recently commented that credit cards are effective tools for financial management. As long as cardholders can afford to pay the balances in full each month, that is. Some consumers with poor credit scores use credit cards for bad credit to correct their situation, charging small amounts each month and repaying the balance before interest is imposed.
The Post Office predicts that tightened budgets will lead to a significant increase in credit card use during January. It expects over one-third of UK cardholders to pay for everyday expenses with their cards. Over two million Brits report they will charge more on good and bad credit cards this January than last.