Credit card spending ‘7.5% higher in November compared with year earlier’
Households’ credit card spending grew in November compared with a year earlier – reflecting the growing use of plastic as a “preferred form of payment”, according to a trade association.
The £11.3 billion of credit card spending in the month was 7.5% higher than November 2017, UK Finance said.
Buying goods or services on a credit card can give people added consumer protections if something goes wrong.
Section 75 of the Consumer Credit Act protects people if they use their credit card to buy something costing between £100 and £30,000.
Consumers can put their claim to the credit card company to get their money back as well as the retailer if something goes wrong with their purchase – which could be useful if, for example, the retailer has gone bust.
People may also be able to make a claim when they only used their credit card to pay for part of the cost of what they bought.
Eric Leenders, managing director, personal finance at UK Finance, said: “Total credit card spending increased in November, while borrowing growth remains constant compared with November last year.
“The increase in spending, which is largely offset by cardholder repayments, reflects the growing use of credit cards as a preferred form of payment, particularly in travel, as consumers take advantage of stronger customer protection and value-added benefits.”
But, while credit cards can bring added protections, those finding it hard to clear what they currently owe on their credit card may face a tougher time shifting to a 0% balance transfer credit card to manage their debt.
Separate research from financial information business Defaqto has found that the number of these card deals available has shrunk by 17% over the past year – from 110 deals in December 2017 to 91 in December 2018.
Brian Brown, head of insight at Defaqto, said: “0% balance transfer cards give consumers the opportunity to pay down their debts over a set period without incurring an expensive interest rate.
“However, users must be sure to make a note of when this payment period comes to an end as these 0% rates are only introductory.
“Those who don’t manage to clear their balances in this time will be in for a nasty shock.”
Meanwhile, UK Finance’s figures also suggest that households are keeping more cash where it can be easily accessed if needed.
Personal deposits grew by 0.7% annually in total – while deposits held in instant access accounts grew at a faster annual rate of 3.1%.
UK Finance also said mortgage approvals were down in November compared with a year earlier.