11 April 2016

How are we using our credit and debit cards?

The chances are, you have both a credit card and a debit card – perhaps with contactless technology – in your wallet. According to the UK Card Association (PDF), we spent £53.2 billion on cards in November 2015 in the UK. And we’re making more card purchases and moving away from cash. Payment card spending grew 8.3% percent last year.

Online shopping could be influencing our use of cards rather than cash – in 2015 there was a 23% increase in the number of online card purchases, showing that the shift towards ecommerce is still ongoing. Despite the growth of online payment systems like Paypal, many of us still reach for our card when buying online.

We look at how the UK uses credit and debit cards, and how to get the most out of them.

How are we using our debit and credit cards?

The big news is that overwhelmingly, we use debit cards rather than credit cards. In November 2015, we spent £37.7 billion on debit cards, but only £15.5 billion on credit cards. 77% of all purchases in 2014 were made with a debit card.

This trend varies across types of spending – for example:


  • We used our credit cards more on catalogue shopping in 2015 – spending £2.6 billion on credit, but only £1.9 billion on debit cards
  • It was the same story with luggage and leather goods – £208 million on credit, and £168 million on debit cards
  • Auto rental spending was higher on credit cards, maybe due to many car hire companies requiring this form of payment
  • And airlines took more on credit cards too – £7 billion on credit cards, £5 billion on debit cards.

Generally though, debit cards are the ones we reach for, especially for everyday spending.


  • We used debit cards for £79 billion worth of supermarket shopping in 2015, and spent £23 billion on credit cards
  • Pubs took £3.8 billion from debit card spenders and £1.5 billion on credit cards
  • Debit card spending in restaurants was more than twice as high as credit – £17 billion versus £8 billion.

Even luxury items, which might seem more likely to be credit card purchases due to a need to spread the cost, are often being put on a debit card. In 2015 we spent £7 billion on debit cards on department store purchases, and £5 billion on credit cards.

So which are best, credit cards or debit cards?

Both types of card can help you manage your money effectively. Your spending style, attitude towards consumer protection and willingness to move money around could determine which card you feel most comfortable with.

Debit cards

Debit cards are great for paying for things immediately. Money comes straight out of your bank account, and as long as you don’t go overdrawn, you won’t run up debt. Debit cards also give you free cash withdrawals at many ATMs. If you’re dealing with a retailer who charges a fee for credit card transactions, you can often avoid this by using your debit card instead.

The other advantage of debit cards is the contactless technology they increasingly feature. During 2014, spending on contactless cards rose by an astonishing 331%, as consumers relished the freedom to buy a magazine or coffee in seconds without counting out change. Now that contactless payments up to £30 can be made, more of us are using this technology as a matter of course.

If your debit card is used fraudulently, report it to your card issuer and they will refund your account straightaway in most cases, provided you’ve not acted fraudulently or without reasonable care (for example, you haven’t kept your PIN written down with your card or disclosed it to someone else).

The average transaction value (ATV) shows that we’re now more likely to use cards for smaller payments. There’s been a downward trend in transactions values since 2011, and this could well be linked to contactless technology which was introduced in the UK in 2007. For retail sales, the ATV in November 2015 was £31.88, down by 12p from the previous year and hovering close to the £30 contactless payment threshold.

Credit cards

Credit cards are useful if you need to borrow money short-term, although you could pay high interest on your debt if you don’t either pay it off each month or opt for a 0% card. If you have lots of debts on different cards you could consolidate them all by doing a balance transfer onto a single 0% card and pay it off monthly over a set time. In 2014, 60% of UK adults had a credit card, and 43% of these either had 0% interest or are repaid fully before the interest-free period ends.

There are often fees when you use credit cards – you’ll be charged for withdrawing cash, or for example booking flights. Some cards do, however, give you give cashback or rewards.

Credit cards also have higher levels of customer protection. If you’re risk-averse, you may like the extra protection that comes as standard with credit cards.

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