UK Households Lean on Credit as Cost Pressures Persist, Despite Economic Stabilisation

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

“Early signs of consumer relief emerged in the latest UK Finance card spending report, but the cumulative pressures on consumer finances remain high. While total credit card spending rose by 0.2% year-on-year, outstanding balances continued their upward trajectory, increasing by 5.2% over the same period. Meanwhile, despite a modest rise in transactions, debit card spend fell slightly (0.6%) in November, which is notable given Black Friday sales fall within this period. 

“In terms of the good news and signs of consumer relief, consumers are continuing to make headway in reducing their monthly incurred interest on credit card debt. The percentage of balances that incur interest are down nearly a full percentage point since last year at 48.7% down from 49.5%. However, the picture is less positive in terms of reliance on credit. The continued divergence between debit and credit spend growth suggests that consumers are increasingly turning to borrowing to manage everyday expenses, even as inflationary pressures show signs of easing. 

“TransUnion’s Q4 2024 Consumer Pulse survey found that inflation remains a top concern for 83% of UK consumers heading into the new year. The continued growth in credit balances, alongside the high proportion of interest-incurring debt, points to the need for financial resilience measures to support consumers through uncertain economic conditions. 

“As households navigate the evolving landscape, financial institutions must prioritise responsible lending and data-driven decision-making. Understanding consumers’ financial health in real time will be key to ensuring sustainable borrowing habits and supporting long-term financial stability.”