Consumers switch to debit card spending

Published on Friday 15 May 2009 20:39

CREDIT card spending continues to fall as consumers reduce their dependence on borrowing, new figures out yesterday revealed.

Data published by payments association Apacs showed that total spending on credit cards in the first three months of this year was 3 per cent lower than in the same period in 2008. A shift towards greater use of debit cards took overall spending on "plastic" up 5 per cent to 94.2 billion.

Debit cards accounted for 74.5 per cent of all "plastic" spending, continuing a trend established last year, when total spending on debit cards soared by almost 10 per cent.

Sandra Quinn, director of communications for Apacs, warned against reading too much into the decline in credit card usage.

She said: "It is hard to say if we are seeing a shift towards people spending what they have, rather than what they can borrow. It will take another couple of quarters before we can say that."

Quinn also noted that credit card repayments were at the same level as in the corresponding period last year, despite the recession. "There is evidence that people who are still in employment and have benefited from lower mortgage repayments are using some of the extra money to pay off other debts," she said.

There was a 10.6 per cent decline in the number of cheques used and a 9.4 per cent fall in the total value of cheques in the first quarter, compared with the same three months last year.