Plastic card spending hits a high
Figures that have been released by APACS, the association that represents credit card companies in the United Kingdom show that total spending on plastic cards amounted to an incredible £26.4 billion in June 2006 and that an absolutely astonishing sum of £151 billion has been spent on purchases with plastic cards during the first six months of 2006.
Spending on debit cards dominates this with a total of 70% of the spending being on debit cards. The remainder is spent on credit cards.
Increased consumer spending seems to be a real feature of this century. It was not long ago that people only tended to get into debt when they bought a house. Now more and more people will make both large and small purchases on credit or by borrowing the money. Some of this spending is with the intention that the money will be repaid before the interest is applied. This makes good sense as then interest can accrue on the shoppers’ money whilst it is in the bank. However most current accounts do not apply particularly favourable interest rates. Money from savings accounts where interest rates are higher cannot be used to pay of the credit card purchases monthly as most savings accounts apply interest penalties where the money is not left.
With increased spending on credit or borrowed money should come increased caution in avoiding spending more than the consumer can afford to repay. Unfortunately this is not often the case and a lot of spending goes on even though the consumer knows they will struggle to repay the borrowed money or credit. Impulse buying is more and more to blame for this. Shops are always offering more and more deals and bargains which tempt consumers to spend more and more thinking that they are getting a deal that cannot be missed or an exceptional bargain. This may be the case but often the bargain relates to something that the consumer does not need and the cost of a number of non needed bargains or deals can add up to quite a large sum of debt.