The value of credit and debit card transactions in the UK has taken a hammering, according to figures released by trade body UK Finance.

Specifically, UK Finance released on 19 April that there were 1.2 billion debit card transactions in January, 26.6% fewer than in December bet here is the interesting bit. The year-on-year fall is 18.1% compared with January 2020 and the happy pre-pandemic days.

Total debit card spend falls by 7.3% year-on-year. Bad, but not quite as bad as the drop in actual transactions. By contrast, there were 196 million credit card transactions in January – the most up to date month for which numbers are to hand – down by 32.9% from December 2020. And for a better comparison having regard to the impact of Covid, down a whopping 31.1% compared with January 2020.

UK credit card debt is down by 24%
Total spend falls off a cliff, down by 37.9% from January 2020. Meantime, outstanding balances on credit card accounts have contracted by 20.7% over the twelve months to January, as a result of repayments outstripping new borrowing in the year.

According to the Bank of England, UK credit card debit is down by around 24% to £54.7bn.

Even contactless card metrics move in the wrong direction, such is the impact of Covid. The number of contactless credit card transactions for January is 37.7% lower than in December and 44.6% down on January 2020. At the same time, the number of contactless debit card transactions is 30.5% lower than December and 23.5% lower than January 2020. At least in terms of total transaction value, the value of contactless transactions is down by only 2.8% from January 2020.

One other card metric from UK Finance merits a quick mention. Well done to the cards sector in terms of contactless penetration. There are now 92 million debit cards in circulation in the UK, of which 88 million are contactless.

For credit cards, 52 million out of 63 million cards in circulation are contactless.

With total expenditure down, and credit card balances outstanding declining, it may seem a little odd that Barclaycard has seemingly made something of a mess of a round of customer credit limit cuts.

UK tabloid press hammers Barclaycard
The popular end of the UK consumer press has had a field day, with negative stories bashing an allegedly heavy-handed approach by Barclaycard.

As the FCA will be the first to confirm, it is a commercial matter for Barclays to set customers’ individual credit limits. And Barclays, as with all other card issuers, is required to assess customers affordability, including whether credit limits are appropriate.

The kindest criticism one might make here, is that the last part may have been a little lacking at some point in the past, if Barclaycard is really behaving in the manner alleged by the press. The press charge is that Barclaycard is cutting the credit limit for around 100,000 customers by up to 90%, with little warning.

There remains more than ample choice in the market for any aggrieved customers, but slightly less choice than was the case pre-Covid. According to numbers from Moneyfacts, there are 125 credit cards on offer in the UK currently, down from 147 last April.

The press will now watch with interest to note if Barclaycard’s rivals go down the same credit limit cutting route.

Already, Santander and Virgin Money have been quick to flag up that they have no such plans.

Douglas Blakey, Editor