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Consumers spending more on credit cards but staying well within limits – HSBC

People are spending more on their credit cards, new data fro HSBC reveals (Thinkstock/PA)
People are spending more on their credit cards, new data fro HSBC reveals (Thinkstock/PA)

People are spending more on their credit cards, but shoppers are clearing debts and staying well within their credit limit, according to new data from HSBC UK.

Customers of the bank spend an average of £656 on their credit cards, with just over £50 spent per transaction.

The number of customers using credit cards is 2% lower this year than in 2019, before the pandemic, the banking giant told the PA news agency.

However, customers spend an average of 20% more on their cards than four years ago, amid the rising cost of living.

But many customers are demonstrating healthy habits by consistently clearing debts, HSBC said.

Its UK customers use on average just one fifth of their available credit limit.

Furthermore, about 45% of consumers say they pay off their balance in full every month, the bank found in a separate survey of 2,000 adults.

HSBC profits
(Lucy North/PA)

More than half of people in the UK pay for essentials such as groceries and fuel on credit cards at least once a week, the survey also revealed.

Madhu Kejriwal, head of unsecured lending at HSBC UK, said credit cards can be useful to manage finances or make large purchases, but if people are using them to pay for something they do not have a way to pay back then it is “not the right option”.

The study also found that different groups of people prefer to use credit cards for different reasons – beyond the ability to borrow money.

For adults under the age of 24, the chance to get rewards and cash back offered by some credit card providers was the top reason for using them.

Whereas millennials, aged between 25 and 34, value improving their credit score, and over 35s were most likely to prioritise protection on purchases, according to the research.

Last week, data from the Abrdn Financial Fairness Trust found that families in serious financial difficulty were increasingly taking on debt to pay for everyday expenses like food and bills.

It comes as the cost of living continues to rise, with food prices still a 10th higher in October than the same time last year, according to official figures.