Thrifty consumers shun credit cards
14th May 2010
Britons trying to drive down their debt are helping shrink the credit card market, analysts claim.
Cash-strapped consumers are becoming ever more thrifty, with research showing we're all on the hunt for cheaper car and home insurance, as well as cheap gas and electricity deals.
Datamonitor predicts £3.1 billion less being spent on credit cards this year, a 2.7% fall to £110.59 billion.
The slide comes after the market contracted by a record £7.8 billion in 2009, and the group does not expect it to return to growth until 2011.
Even then, the total value of transactions is only expected to rise to £113.37 billion, still well down on the peak of £121.4 billion reached in 2008.
The research also found there had been a 10% fall in the number of credit cards in issue during 2009, as issuers aggressively reduced the number of dormant accounts people had.
The group said the outstanding balances people had on their cards was also falling, as was the value of the average transaction. This dropped to £62 in 2009, down from £64.90 the previous year, and is expected to fall further in 2010 to £60.70.
It said that during most months of 2009 the total value of transactions was between £1 billion and £1.5 billion lower than it had been a year earlier, which it warned was impacting on card providers' revenue.
Copyright © Press Association 2010
