Have you paid off your credit card?

Date Published: 31/03/2021 17:26

Figures show that people are paying off their credit cards more than they are spending. Jillian Thomas takes a look at the data.

I often say pay off your debts first. And it seems that is what people have been doing in this pandemic.

Outstanding balances of credit cards fell by 16.8 per cent in the 12 months to December 2020, according to UK Finance, which represents the banking and finance industry.

And December was the fifth month in a row where credit card repayments outstripped borrowing, as it appears people used spare cash to pay off their debts.

Generally, we are using credit and debit cards more. The figures from UK Finance show that total credit and debit card spending reached £64.4bn during December, 0.7 per cent higher than the year before.

Much of this is due to more online spending, with that up 28 per cent from the December before, at a total of £21.7 billion. In fact, in December 2020 a third of all spending was online, as Covid restrictions changed shopping habits.

There was also more use of contactless payments. With the contactless limit increased from £30 to £45 in April 2020, the total value of such payments reached a record in December 2020, up to £12.2 billion, a massive 64.7 per cent up on December 2019. And with the limit due to go up to £100 later this year, no doubt that figure will grow much more.

So, the overall picture is one of more use of cards in the pandemic, but paying off more on credit cards. Getting debt under control is always a good thing, and once you have your debts under control it is time to start thinking about saving and investing.

If you think we can help you manage your money, please do get in touch.

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