Decline in credit card transactions expected in 2010

Credit card spending is expected to fall over 2010, as more people focus on bringing down their debt . Research by Datamonitor has predicted that the reliance on credit cards for funding daily purchasing and paying bills, a spending pattern that emerged out of the recession, is coming to an end, with spending set to fall by around 2.7 per cent compared to last year.

This would reduce overall spending on credit cards by GBP3.1 billion to GBP110.59 billion, which comes after the record slowdown of 2009, when spending decreased by GBP7.8 billion. Although the downturn in use will affect the revenues of card providers, the study also found that the use of credit cards is expected to rise again next year.

The report also found that the number of credit cards issued in 2009 decreased by 10 per cent, with a fall in the value of the average transaction down to GBP62 from GBP64.90 in the previous year.

Gilles Ubaghs, financial services analyst at Datamonitor, said that This decline in transaction values is problematic for card issuers, but is not as severe as was initially feared at the beginning of 2009. He also pointed out that even though credit card transactions had declined because of the recession in comparison with other forms of consumer credit, the reduction had been both more moderate and stable.