Rise in credit and debit card spending
Figures that have recently been released have shown that spending on credit and debit cards amongst UK consumers has increased over the past year, with the rise almost reaching double digits according to officials. This appears to go against the many suggestions that have been in various reports claiming that consumers are tightening their belts as they try to get their finances back in order following the financial crisis and the recession.
During the month of August consumers spent 9.2 percent more on their credit and debit cards than they did in the same month of last year. This is according to officials from Barclaycard, who carried out the research. The credit card giant said that a number of factors may have contributed to the increased spending, including back to school spending, sales and discounts in shops, and the rising cost of food and other goods.
August is said to be the fourth consecutive month where the annual rate of growth has been at more than 9 percent, and this flies in the face of suggestions that consumers are being more cautious with their spending in the current financial and economic climate. Spending levels in August itself did fall slightly compared to July, with officials putting the 1.9 percent dip down to shops starting their sales in July.
Stuart Neal, head of Barclaycard UK Payment Acceptance, said: “With leading retailers warning that the Government austerity drive will keep the economy in the doldrums and hit consumer confidence hard, it is good to see a fourth month of increased spending. While there is some cause for viewing the near future with a certain amount of trepidation, recent indicators are good. Confidence remains relatively high, but it will be important to see how spending fares when public spending cutbacks begin to hit people’s pockets, and not just the headlines.”
Monthly fee for new Sainsbury’s credit card
The UK supermarket giant Sainsbury’s has launched a new credit card that may appeal to many customers because of the variety of benefits that are on offer. However, the card comes at a price, as customers will be charged £5 a month for the privilege of enjoying these benefits.
Officials believe that there will be mixed reviews to the new Gold Credit Card from Sainsbury’s, which is set to launch this month. Whilst there are a number of valuable benefits included with the credit card officials believe that consumers will be loathe to pay the £5 monthly fee because they are not used to paying monthly fees on credit cards these days.
The interest rates on the new Gold Credit Card are fairly reasonable, with a rate of 9.94 percent on purchases. The benefits on the credit card include worldwide travel insurance for two adults and up to six children, which is ideal for families. There are no foreign transaction fees, no cash advance fees in the UK or abroad, and interest free cash withdrawals. In addition to this cardholders will be able to enjoy earning double Nectar points when shopping at Sainsbury’s stores, online, or at Sainsbury’s petrol stations.
However, one financial industry official said that it would be a real challenge for Sainsbury’s to try and get consumers to pay for the credit card when most were used to being able to have a credit card for nothing. This is particularly true in the current financial climate, where many are looking to cut back on their monthly outgoings.
He said: “Credit cardholders generally are not used to having to pay a fee. The real challenge for Sainsbury’s will be to attract customers to pay for something they are used to getting for nothing.”