Consumers Still Feeling Long-Tail Pinch of Inflation as Credit Card Spending Grows

James O’Donnell, director of research & consulting at TransUnion in the UK, comments on the recent UK Finance Card Spending report: 

“The latest UK Finance card spending report covering May 2024 shows another steady year-on-year rise in credit card spend of 1.4%, and a similar rise in the number of credit card transactions, growing at just 1.3%. However, outstanding balances grew faster, with an 8.5% rise. 

“What’s more, we’re still seeing almost half (48.9%) of outstanding balances incurring interest, compounding an already difficult financial situation for stressed consumers. This is no surprise, with nearly half (46%) of households reporting that their wages are not keeping up with inflation according to TransUnion’s Q2 Consumer Pulse survey. This leaves consumers more reliant on credit to plug gaps for everyday expenses while this lag persists – particularly as more than a third (36%) report they are spending almost everything they earn each month. 

“The ability to access and manage credit is crucial for UK households, but providers need to make sure they are lending responsibly in a time where the financial picture is constantly changing. Financial institutions need to be calling on the very latest tools and information to ensure they are getting a comprehensive view of every consumer. This will ultimately help promote financial wellbeing as the nation continues to tackle challenges like increased unemployment, high economic inactivity, high interest rates, and low GDP growth.”