The Association for Payment Clearing Services (APACS) has released a study entitled 'The Way We Pay 2007; UK Plastic Cards', which shows record spending on debit and credit cards in 2006.
A total of £321 billion was spent on plastic last year, around one third of total consumer spending in the UK. Cash, automated payment systems such as direct debit and cheques accounted for the other £710 billion.
Of the £321 billion, 61 per cent, or £195 billion, was spent on debit cards, leaving £126 billion on credit cards. This represents a twofold increase since 1996. The combined figure has trebled since that date.
Director of communications at APACS, Sandra Quinn commented, "Consumers enjoy the ease and convenience plastic cards bring, and today most retailers and supermarkets take plastic, as do an increasing number of professional service providers."
This trend seems to be hinting at the possibility of a 'cashless society', where carrying around small change is a thing of the past. In Hong Kong, this is already something of a reality - people use the 'Octopus Card' to pay for public transport, newspapers, snacks and other items. This has been translated in London as the 'Oyster Card', which currently is just used to pay for public transport.
As part of their recent report, APACS has published a consumer guide to debit and credit cards, which gives details of the various cards on offer, what to look for and what to avoid.
Despite the clear upward long term trend in plastic usage, 2006 was the first time in the credit card's 40 year history that spending actually fell year on year, with £1.6 billion less being spent in 2006 than in 2005. This decrease points to an increasing awareness among the public of the risks that can be associated with credit cards, and that rather than providing free 'credit', the cards are a rather expensive way to borrow.
This drop in usage comes after a period when credit card providers have been coming under pressure from consumer groups. The OFT is working with the industry to try and make the fees associated with credit cards more apparent to the customer, after a complaint was made by Which?.
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