UK Finance – Card spending fell in October. For the balances on credit cards accounts is the eighth successive month in which repayments have outstripped borrowing.

UK Finance data shows that outstanding balances on credit card accounts fell by 14.7 per cent in the year to October 2020. This is the eighth successive month in which repayments have outstripped borrowing, and the largest drop over a twelve-month period since the pandemic began.

This could be attributed to people choosing to pay off debt or reduced usage of credit, and the reduction of large expenditure on items such as holidays due to the continued travel restrictions.

Eric Leenders, Managing Director of Personal Finance, UK Finance, said: “Outstanding balances on credit card accounts fell for the eighth month in a row, reaching the largest drop over a twelve-month period since the pandemic began – indicating that more people were paying off debt, or fewer making use of credit.„

Data published by UK Finance also reveals that spending across debit and credit cards fell in October 2020 compared to the previous month, as additional social distancing measures were introduced across the UK.

There were 1.7 billion debit and credit card transactions in the UK in October, a 0.4 per cent decline from September and 3.6 per cent lower than in October 2019. These transactions amounted to a total spend of £64.2 billion, which was 2.5 per cent less than the previous month, but 4.9 per cent higher than October 2019.

The proportion of spending made using contactless cards also fell, as Covid-19 restrictions provided fewer opportunities for people to spend money in pubs, restaurants and on public transport. Over four in ten (41 per cent) card transactions were contactless in October, compared to 44 per cent the same month the previous year.

There was a total of 687 million contactless card transactions in October, 1.9 per cent lower than in September and 9.8 per cent lower than October 2019. However, the total value of contactless transactions, at £8.1 billion, was 15.8 per cent higher than October 2019 as people had the opportunity to take advantage of the increased £45 payment limit.

The number of transactions made by UK debit cardholders fell 4.6 per cent compared to the previous month to 1.6 billion, which was also 3.5 per cent lower than October 2019. The total spend of £53.2 billion was 9.1 per cent lower than in September and 0.2 per cent less than the same month in 2019.

„October saw card spending decline in the UK as additional social distancing measures and Covid-19 restrictions were put in place across the country, reducing opportunities to spend on the high street and in pubs, bars and restaurants. Spending on contactless cards also fell as regional lockdowns came into force, restricting use of contactless across retail outlets.  However, contactless remained popular for essential transactions, with consumers being able to make use of the increased £45 payment limit,” Eric Leenders added.