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Consumers take to credit cards as new figures show 8.1% increase in spending

Friday, 24th August 2018

New figures from UK Finance reveal credit card spending went up 8.1% compared to last year with outstanding balances on the card also increasing by 5.3%. The warm weather and World cup football being one factor in the rise.

Total credit card debt up to December 2017 was 70.1Billion* and figures show that 55.6% of credit card balances were bearing interest at the end of 2017.*Figures from The Money Charity Feb 2018

Overdraft borrowing

Consumers bank overdraft borrowing fell 4% when compared with the same period last year. This could be down to consumers being more aware of the high fees and penalties for having unauthorised bank overdrafts and using other forms of credit.

Personal deposits

These grew by 1.2 per cent and deposits held in instant access accounts were also higher, up 3.8% per cent than a year earlier.

Mortgage lending

Gross mortgage lending for the total market in July was £24.6bn, some 7.6 per cent higher than a year earlier. Mortgage approvals fell by 0.8% when compared with the same month a year ago but within this remortgaging approvals rose 2.8%. There was a fall in house purchase of 0.6 per cent and other secured borrowing of 11.7 per cent.

Mortgage approvals

The number of mortgage approvals by the main high street banks in July fell by 0.8 per cent compared to the same month a year earlier. Within this, remortgaging approvals were 2.8 per cent higher than for the same period a year earlier. There was a fall in house purchase and other secured borrowing of 0.6 per cent and 11.7 per cent respectively.

Commenting on the data, Peter Tyler, Director at UK Finance, said: “July saw steady growth in gross mortgage lending, driven largely by remortgaging as homeowners locked into attractive deals in anticipation of the recent base rate rise. Card spending has also strengthened, reflecting increased expenditure during the holiday period and an uplift in retail sales due to the World Cup and warm weather.

“However the broader economic outlook remains mixed, with households continuing to see their incomes being squeezed by rising inflation. This may explain the shift towards deposits held in instant access accounts, as consumers opt to keep their money close to hand.”

Full report can be read here - external link UK Finance: Household Finance Update for July 2018 – Release date 24 August 2018

Help and advice for credit card debt

We offer five great tips on how to reduce that credit card debt, if you are making just minimum payments on a credit card then at least read tip number 3 as this is might just save you thousands of pounds and the time period it will take to clear the debt.

Help and advice for credit card debt – Five top tips (DebtWizard page)

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