Consumers To Increase Spending On Credit Cards

Over the next three months UK consumers are expected to double the amount they spend on their credit cards, with foreign holidays and DIY accounting for the largest increases.

According to the Morgan Stanley Card Index, overall spending levels look set to double from £645 to £1,225 during the second quarter.

The predicted increase in spending looks to be fuelled by an increase in the amount of money UK residents are planning to spend on their homes and cars – up from £152 to £363 – and holidays, up to £331.

The figures were a result of sample of 2,000 adults asked by Morgan Stanley about intended future purchases.

The figures also revealed men are likely to overtake women in plastic spending stakes over the next three months, spending around £1,355 on their credit cards compared to £1,097 that women are expected to spend. While men will spend more on improving the home, they’ll also spend more than women on grocery shopping for the first time, splashing out £335 compared with £295 by females.

“ After a lull in spending in the New Year, we are now seeing a rise in spending on DIY and holidays as we hit the bank holiday season,” said Patrick Muir, marketing director for the Morgan Stanley credit card.

Consumers are also turning to the convenience and security that credit cards offer when it comes to purchases such as the weekly shopping. More and more consumers are using both their credit and debit cards rather than cash at the tills, for the first time ever. Spending on groceries is up from £177 to £315, largely due to consumers using the plastic instead of cash.

The plethora of deals being offered by UK credit card providers, such as 0% interest on purchases for up to six months and low interest rates for the lifetime of the card’s balance, are contributory factors for the increased spending on plastic.

Mr Muir added, “ Britons are increasingly using their credit cards to pay for everyday items, including groceries, petrol and bills.

“ These results show that across the board, people are comfortable using their credit cards for all types of purchases, often making the most of cash-back schemes and being rewarded for the things that they buy anyway.”

Currently there are many cards offering various loyalty schemes, such as cash-back and air miles, as well as other bonuses often redeemable at various retailers.

Alisdair Milton
28/4/06

 

Like this news story? Grab our RSS credit card news feed updated on a daily basis.