Credit Nation become Savvy Spenders

Over three fifths (61%) of UK adults now own a credit card and choose to do so because of the benefits it can bring, according to the latest Halifax research.

One in three (34%) credit card holders chose their credit card based on the rewards it can offer them and 17% picked the card due to its good introductory offer on balance transfers.

Recent figures from the British Bankers Association (BBA) have shown credit card spending in the UK stands at £12.5bn, up 7% on this time last year. However,  spenders are becoming more savvy, and whereas three years ago the proportion of UK adults paying off balances in full was 58%, now almost two thirds (63%) report paying off their card in full every month. BBA figures have shown 42% of all short-term and longer-term borrowing on cards currently incurs no interest.

As shoppers choose credit cards based on the rewards they offer it is not surprising to see that half (48%) of all credit card holders use their plastic at least one a week. 

Jon Roberts, Halifax Credit Cards, said: “New industry figures show UK consumers are spending more on their credit cards and our customers’ behavior suggests this is out of choice rather than necessity. The majority of people are confident enough in their finances to pay off their credit card in full each month, meaning they are taking the opportunity to reap the rewards available from many of today’s credit cards.

“As always, when borrowing on any type of credit, individuals should alwaysplan ahead to stay on top of their finances and ensure they can plan to repay the balance. Credit cards can be a good method for short term borrowing; in a very competitive market, consumers should look around for the deal that best suits their needs.”

Spending through confidence

The Halifax research also shows that consumer spending is linked to consumer confidence, with one in four (26%) credit card holders feeling they have more control over their borrowing now than they did three years ago and just over one in five (21%) credit card customers now switching cards at least every three years.

When asked about their personal finances as a whole, more respondents were optimistic than pessimistic, with 35% of UK adults feeling positive about their current financial situation.

Additional insight:

The most common spending for those with a credit card is everyday spending such as groceries (51%), followed by meals and nights out (45%), and items for special occasions (41%).

The least common spending from the given list for those with a credit card was for rent and mortgage (1%) and debt consolidation (3%).

Those in the East of England (57%) and Northern Ireland (54%) are least likely to currently have a credit card, compared to London and the Midlands, where nearly two in three currently do (63%).

The East of England has the highest number of people with store cards (19%) and Northern Ireland is the biggest users of short-terms pay day loans (4%).

Those in London with a credit card use it most often, with 12% saying they use it everyday and a further 15% saying they use their card 4-6 days a week.

Those in Scotland are the least frequent credit card users, with 5% using every day and only 6% using their card 4-6 days a week.