The average amount spent on credit cards per month in the UK increased in August to its highest level in eight years, according to new data.
Global analytics software provider FICO said the average spend went up to £711 in August, a rise of £23 compared with the previous month.
Moreover, for the third consecutive month pre-pandemic levels were exceeded, up £40 when compared with August 2019.
FICO said the summer holidays and a continued reliance on pandemic savings probably contributed to a growth in the average spend on cards.
FICO said the signs of financial pressure were also evident with an increase in average balances on accounts with missed payments and growth in card usage.
“The change in consumer behaviour over the last 12 months is also illustrated in a 25% increase since January 2021 in average sales on credit cards,” FICO’s Stacey West said.
“And it seems that pandemic savings are still underpinning this spending, as the percentage of payments to balance is 28% higher than August 2020, and 24% above pre-pandemic levels in August 2019,” she added.
The latest FICO data said that August saw the percentage of accounts missing payments fall 4.5% month on month and their associated balance as a percentage of total balance drop by 5.1%.
However, consumers missing two payments saw their average balance increase £27, representing a 12% increase when compared with August 2019.
“And the longer the missed payments, the bigger the accumulated debt,” FICO said.
The latest findings also revealed that accounts going over their limit increased. However, it was still 54% lower than in August 2019.
The average amount spent above the limit fell a further £5 in the month but is 15% higher than two years ago, the data showed.
Cash usage on cards
August also saw more consumers use cash on their credit cards, up 6.5% month on month. Cash as a percentage of total spend also increased compared to July 2021, although it was 9% lower than a year ago and 41% lower than August 2019.
“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.
Cash spending on credit cards is an important indicator of financial stress, FICO noted.