Between 2000 and 2005 credit card use in the UK accelerated
Castle Donington, Derby (PRWEB UK) 25 July 2012
Some 40 years after they were introduced, credit cards have suffered a reversal in popularity after years of growth. Figures from the UK Cards Association, passed to the Financial Times, reveal that debit cards outnumber credit cards, indicating a big change in consumer attitudes to spending and borrowing during the past decade.
Between 2000 and 2005 credit card use in the UK accelerated, as high consumer appetite for borrowing and fierce competition from providers drove up demand. The number of cards in this period rose from 47m to 70m. But in the middle of the decade borrowers re-thought their spending habits, and reduced their credit card use years before the credit crisis came along.
Paul Rodford, head of card payments at the UK Card Association, said no single factor could explain the falling popularity of credit cards. The change, he insisted, had been led by consumers rather than regulatory change. “This was not some sixth sense anticipation of the crisis to come, but rather a variety of things,” Mr Rodford said.
“By 2005 the market was saturated, and there was an increase in negative coverage from the media surrounding debt and the costs associated with credit cards. By the end of the decade the number of credit cards in the UK fell to 55.6m, and outstanding balances were £10bn lower. Banking customers have turned to debit cards. Spending on debit cards doubled in the five years to 2010. By 2010 some 84m cards were in circulation in the UK. Those consumers who still use credit cards have become more cautious about outstanding debts. Last year almost two-thirds of borrowers paid off the full sum owed each month, compared with about half in 2005."
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