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Home Finance Cost of living crisis makes more turn to credit as outstanding balances climb

Cost of living crisis makes more turn to credit as outstanding balances climb

by uma

 

  • There were 2.2 billion debit card transactions in October, 12.4% more than in October 2021.
  • The total spend of £66.6 billion was 9.1% higher than October 2021.
  • There were 354.6 million credit card transactions in October, 11.3% more than in October 2021.
  • The total spend of £19.2 billion was 15% higher than October 2021.
  • Outstanding balances on credit card accounts have grown by 10.1%.

UK Finance has issued card spending data for October 2022 Card Spending Update – October 2022.pdf (ukfinance.org.uk)

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“We are continuing to splash the cash despite the cost-of-living crisis with this data showing total spend rising on credit and debit cards. This could be a sign of early Christmas cheer as people start shopping or, more depressingly, show just how much the price of our day-to-day items have risen.

For a long time, the money people were able to save during the pandemic gave them a decent buffer against these rising prices. However, as the money runs dry, and people have economised as much as they can, we are increasingly seeing people turn to credit to make ends meet.  Credit card spending is 15% higher than the previous October and, more ominously, outstanding balances have grown by more than 10%.  If balances aren’t cleared in full every month, there’s the worry they accumulate and become an increasing financial burden to people who are already struggling.

Today’s inflation data shows early signs prices are starting to cool. However, the prices of essentials like food and energy remain eye wateringly high which means there’s little respite to the squeeze in our budgets for the foreseeable future.”

 

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