Consumers have shaved £8.9bn off their outstanding credit card balances over the last five years as they have learned how to use their plastic “more wisely”, according to an industry body.
The UK Cards Association said credit card debt has fallen by 13% since 2008, despite a £26bn increase in spending, as consumers use their cards more prudently by paying off balances faster and making the most of zero per cent interest introductory offers.
The association, which used a combination of Bank of England figures and its own research, said outstanding balances on credit cards in the UK fell from £65.8bn in 2008 to £56.9 billion last month.
It said the proportion of credit card balances bearing interest has declined steadily since 2002, down from more than four-fifths (81%) to three-fifths (60%) in 2013.
More bills being paid in full each month, consumers paying off their outstanding balances more quickly, and the increased use of 0% interest deals have resulted in the decline, according to the body.
Meanwhile, over the five-year period since 2008, consumer spending on credit cards has risen by a fifth (20%), from £133bn to £159bn a year by December.
The association said strong growth in the online retail sector has been “a key driver” in the increase, with almost half (48%) of online card spending taking place on a credit card.
Richard Koch, head of policy at the UK Cards Association, said: “We’ve seen a steady decline in the level of debt across the credit card market in recent years.
“Consumers are now using the interest-free periods that credit cards offer and then paying off their balances faster.
“Responsible lending is at the heart of the industry, and the vast majority of consumers use their credit card prudently.”