UK credit card borrowing is in decline according to
PricewaterhouseCoopers’ (PwC) annual report.
The research points to the successive years
spent by UK consumers paying off debits – since the financial
crisis – as a major contributor to this decline.
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There is some optimism however, in that
outstanding credit card debt fell by 5% in 2011, leaving the
average credit card balance at around £1000 (€1200).
The report indicated that credit cards are
also losing their share of the market to other payment types – most
notably debit cards which have grown by 10% in 2011 and are now
used more frequent than cash in payments for the first time.
PwC report suggests that credit card providers
have also been scarred by the scrutiny they’ve received from
regulators and media recently; this has been compounded by the
increasing difficulty consumers face in obtaining credit cards.
Simon Westcott, director, PwC said: “Credit
card providers will need to quickly look at ways to attract
consumers by exploring digital technologies and mobile payments if
they are to continue to compete in the payments market.”
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By GlobalDataPwC said that in response to the downward
uptake of credit cards, regulators may return to annual fees as
they push for more transparent ways of charging.
As consumers turn away from credit cards or
are unable to obtain them from mainstream lenders, they may be
forced to turn to alternatives such as the so called ‘pay-day
loan’, the report said.
“Mainstream lenders need to aware that what
may have begun as a last resort, could be an enduring relationship
as consumers are pleasantly surprised at the convenient and
innovative service they receive from these smaller, more agile
providers.”
“As these providers become more conventional,
we are likely to see them venture further into the mainstream
market with their own credit-card, longer term loan products or
even current accounts,” Westcott said.
