UK Shoppers Prefer Cards for Christmas Shopping

THURSDAY, FEBRUARY 15, 2007

Card transactions in December 2006 accounted for a total of 63% of the retail sales in the UK for the month and of the total sales, £19.6 billion were debit card purchases rather than credit cards, an increase of 15.3% over the previous year. Presently, purchases on debit cards in the UK is almost double that of credit cards. Why is that? Consumers are becoming more aware of the debt that they carry, and as such, they are becoming more responsible in their spending in order to avoid debt problems. Using a debit instead of a credit card allows the consumer to spend only what is in their checking account, thus making it equally equivalent to paying by cash or cheque and avoiding any increase in debt.

On the down side, though UK consumers spent approximately £3 of the total spending online with the majority of those purchases by credit card, the opposite of the offline trend in spending. This is because UK consumers are more concerned with debit card fraud than credit card debt. Though this is perhaps a valid justification, it can predispose them to debt problems if they do not exercise extreme caution in the way they make their purchases. In order to avoid the pitfall of increasing personal debt because of a fear that internet shopping will increase the potential for fraud by using a debit card, a consumer can immediately overturn the transaction. In other words when a consumer uses his credit card online, to avoid additional debt problems, the consumer adds that amount to the next payment he or she makes, thus offsetting any additional debt the transaction caused.

The important thing is to learn how to manage your debt in a responsible way so that you donít create or worsen debt problems. The use of a credit instead of a debit card for online transactions is a viable solution to a consumerís fear as long as the transaction is offset with the next payment. If a consumer fails to do that, he is setting himself up for excessive debt and future debt problems if he doesnít change the pattern.