Consumers in the UK are using cash to pay for things, rather than a credit or debit card, in a bid to curb their spending as the double dip recession continues to bite.
That is the finding from the British Retail Consortium (BRC), which has published its annual payments survey – looking at how Brits pay for things at retail outlets.
It found that more British shoppers are using cash than last year, which it has put down to Brits tightening the purse strings in the face of economic turmoil.
The BRC found that cash was used in 5.7% more transactions in 2011 than in the previous year, accounting for almost 60% of all retail payments.
The retail group has said this is because consumers find it easier to manage their money and curb their spending when using cash over plastic.
“Customers have less money. They’re buying things only as and when they need them, shopping more often but spending less each time, and they’re more likely to be paying with cash,” said Tom Ironside, BRC Director of Business and Regulation.
“In 2010 financial worries were putting people off running-up debt and they turned away from credit cards. Now times are even tougher and overall card use is down by 10.5% as people have switched to cash to better manage their spending.”
The research also found that cash payments are still the quickest way to pay, with transactions taking an average of 27 seconds – compared to an average of 36 seconds card payments.
However, this is likely to change in the future as contactless cards and mobile payment systems become increasingly popular.
The result of the BRC’s research is the latest evidence suggesting that Brits are trying to reduce their credit card debt as household finances are squeezed.
Figures released by the Bank of England last month showed that credit card lending has fallen to its lowest level in five years.
The figures showed that credit card repayments outstripped credit card borrowing by £128 million in April – showing that consumers are more concerned about paying off debt than accumulating more.
“Households are favouring paying down debt, rather than undertaking new borrowing. Demand for credit will remain contained through 2012 amid lingering job security concerns,” said Melanie Bowler, an economist at Moody’s Analytics.
If you are trying to curb your spending, investing in a prepaid credit card is a good alternative to a traditional credit card.
Prepaid cards work in much the same way as credit cards, but have a pre-loaded amount on – eliminating the danger of debt.
