Credit card use declining

Consumers have been using their credit cards less frequently in recent months in an attempt to avoid too much debt . Instead there is a growing preference for saving, especially before making large purchases. This general trend towards less credit card usage has become more prevalent in the recent economic crisis, as people have been forced to focus more on repaying loans and credit card debt, signalling a return to a savings culture.

Figures released in the latest ING Direct Consumer Savings Monitor showed the average savings of individuals in the UK to be GBP2,023. The report found that the average deposits into savings accounts in the UK fell by 8.3 per cent, to just over GBP2,000 in the first three months of the year, mostly explained by the repaying of debt built up over the Christmas period.

According to the chief executive officer of ING Direct, Johan de Witt, the levels of money going into savings accounts is increasingly low, and argued that consumers are getting back to the basics and are determined to rebuild their savings.

The figures show that people were showing more enthusiasm for saving leading up to the general election and because of the recent increase in the available tax-free deposits into ISAs, while credit cards were less popular.