Buyers favour debit cards - figures

Consumers are increasingly shunning credit cards in favour of debit ones when making purchases, according to new figures.

People were three times as likely to use their debit card for a transaction as they were a credit card during the three months to the end of September, according to The UK Cards Association.

Overall, debit cards were used 1.5 billion times during the period, while credit and charge cards were used just five hundred million times.

There was also a year-on-year fall in the number of transactions made using a credit card during the third quarter, with usage dropping by 0.7% compared with the same period of 2008, while debit card usage jumped by 8.5%.

The value of spending on debit cards was double that for credit ones at £65.9 billion, compared with £31.6 billion for credit and charge cards.

New spending on credit cards and the amount of interest charged on debts that had already been accrued was 7.5% lower during the third quarter compared with the previous year, with consumers now repaying 98.1% of new borrowing, up from 96.4% a year earlier.

The figures come as the Bank of England released data showing people repaid a record level of unsecured debt during October, reducing their outstanding credit card, loan and overdraft borrowing by £579 million.

But the contraction was driven by strong repayments on loans and overdrafts, with outstanding borrowing through these falling by £713 million, while credit card lending rose by £134 million in October, nearly double the £78 million rise seen during the previous month.

The UK Cards Association said debit cards also dominated all non-cash spending for the first time, overtaking direct debits and direct credits to account for 40.2% of all payments.

The use of cheques continued to fall, dropping by 13%, while the number of cash machine withdrawals made remained broadly stable at 0.5% above levels for the third quarter of 2008, although the amount withdrawn was 0.7% lower.