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UK average credit card spend at highest level in 8 years

UK average credit card spend at highest level in 8 years
For the third consecutive month spending levels on credit cards surpassed pre-pandemic levels in August. Photo: Getty (Luis Alvarez via Getty Images)

The average spend on UK credit cards increased to £711 ($969) in August 2021 – a rise of £23 on a month earlier, according to new data from global analytics software provider FICO (FICO). This is the highest level since FICO started compiling the data eight years ago.

For the third consecutive month, spending levels on credit cards surpassed pre-pandemic levels, with the average spend up £40 on August 2019. There was also a 25% increase since January 2021 in average sales on credit cards.

The report puts this down to pandemic savings underpinning the spending. August also saw credit card holders move from paying less than the amount due to paying the amount due and full balance. However, FICO points to uncertainty as to how long the extra savings will prop up the payment rates.

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Although the percentage of accounts missing payments fell 4.5% month-on-month in August, consumers missing two payments saw their average balance increase by an average of £27 — a 12% or £265 increase on August 2019.

Average UK credit card spend. Chart: FICO
Average UK credit card spend. Chart: FICO (FICO)

The longer the missed payments, the bigger the accumulated debt. Average balances on those missing three payments compared to two years ago were 19% or £451 higher, and for those missing four or more payments debt, was 16% or £429 higher.

The number of accounts going over their limit increased and although the average amount being spent over the limit fell by £5 in August, it was still 15% higher than August 2019.

August saw month-on-month growth of 6.5% in consumers using cash on their credit cards and cash as a percentage of total spend also increased compared to July. Cash use on cards is an "important indicator of financial stress", FICO said.

Read more: UK's most expensive and cheapest places for property rents

Cash as a percentage of total spend was 41% lower than August 2019, a marker of the impact of the COVID-19 pandemic on cash use.

"Whilst it is not anticipated that cash spend on credit cards will reach levels seen prior to the pandemic, data later in the year will show whether the contactless limit increase from £45 to £100 makes any difference to cash usage," FICO said.

Watch: The risks of buying now and paying later