Data just published by UK Finance reveals that credit and debit card activity in the UK fell slightly in June, despite non-essential shops across the UK reopening in response to the lifting of restrictions.

UK Finance says 933 million transactions were made across the month, a 2.7% decline compared to May, and 43.1% lower than the number of transactions seen in June 2019.

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UK Finance is a trade association for the UK banking and financial services sector.

Throughout June, consumers continued their increased use of online retailers, with online card spending accounting for 22% of volumes and 42% of transaction value for the month, compared to 14% and 30% respectively a year earlier.

Outstanding balances continue to shrink

June also saw the UK’s annual growth rate of outstanding balances on credit cards continue to decline, dropping by 13.4% year-on-year, suggesting customers used the lockdown as an opportunity to pay down credit card bills.

Amid less frequent spending and maintained repayment levels, the total value of credit card transactions rose in June, increasing 22.9% compared to the previous month to £12.2 billion.

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This could be attributed in part to a willingness to make larger one-off purchases, such as household goods, in response to increasing amounts of time spent at home.

The surge in contactless transactions continues

The trend towards increased usage of contactless cards has also continued, with consumers and retailers making use of the higher £45 contactless limit. In June 2020, 55.6% of all payments in the UK were contactless, compared to 42% the year before.

These payments totalled £6.5 billion, a 15.5% increase on May, and followed a record month in March, when 56.6% of all payments were contactless.

Eric Leenders, Managing Director of Personal Finance, UK Finance, said:

“While card activity is still significantly below pre-lockdown levels, there has been steady growth in the value of purchases using payment cards in recent months. Despite non-essential shops re-opening in England in mid-June, there was actually a drop in the number of card transactions in the UK compared to the previous month.

“Lower spending and maintained repayment levels suggest that customers may have used the opportunity to pay down their credit card bills and reduce any debts – as the annual growth in outstanding balances contracted by 13.4 per cent in the year to June 2020.

“As shops encouraged customers to pay by contactless card coupled with the contactless limit increase to £45, contactless transactions totalled £6.5 billion in June, a 15.5% increase on May and above the level seen a year ago.”