Spending on plastic falls

Spending on credit and debit cards slumped during January, as consumers caught their breath following the pre-Christmas rush to the shops, figures showed today.

The Association of Payment Clearing Services (APACS) said the number of transactions using cards was 18.6% lower than they had been during December, while their value was 11.6% less.

High street spending on cards fell by more than a quarter to ?4.2bn, with clothing sales 42% lower than they had been in December. Food sales on cards were also lower, down by nearly 23% - but travel expenditure rose by 75% to ?804m as the traditional holiday booking period began.

Despite the month-on-month fall, APACS said there was still a growth in plastic spending year-on-year, with consumers using their cards for 14.7% more transactions - 18.6% higher in value - than they had in January 2003.

Debit cards continued to be more popular than credit cards during January, accounting for 64% of all plastic transactions. The average value of a debit card transaction reached a new high of ?39.23, while the average credit cards transaction was also a record of just over ?62.

An average of ?10.3bn is now spent on debit cards each month, compared with ?9.1bn on credit cards. During the year to the end of January nearly 3.3bn debit card transactions were carried out, with just under ?4,000-a-second being spent.

Sandra Quinn, director of corporate communications at APACS, said: "The usual January fallback in the monthly volumes and values of plastic card transactions was less marked this year than in January 2003 reflecting the better January that many in the retail trade had expected. Spending on plastic cards accounted for some 53% of all high street spending in January 2004."

The report came on the same day as a warning from the Bank of England that people may suffer a shock should interest rates rise, because of relatively high levels of personal debt. Sir Andrew Large, the Bank's deputy governor, spoke earlier of "potential vulnerabilities stemming from higher debt levels".