With the Christmas countdown well underway, a new study released by TotallyMoney.com in partnership with the Centre for Retail Research, revealed that Friday 13th December was forecasted to be the biggest credit card spending day of the year. Throughout ‘Plastic Fantastic’ day consumers were predicted to make 23.2 million transactions worth £870 million, with almost half of this spend (£400 million or 9.4 million transactions) carried out on credit cards compared to £470 million on debit. Credit card debt has been creeping up throughout the year and this trend looks set to continue as credit card spending on the biggest day of the year is 6.2% higher than the same day in 2012.
Research also reveals that this spending frenzy was predicted to peak at 11.10am as consumers rushed around to secure this year’s Christmas must haves for loved ones, beating plummeting stock levels and online postage deadlines. However, this activity may not have garnered the same festive goodwill for some employers as productivity in the workplace would have been hampered as consumers spent £3.73 million per minute. Across all channels, both online and offline, a whopping £1.3bn is expected to be spent on this day.
December’s credit cracker
Total retail spending in December is expected to hit £36bn, 4% higher than last year. More than a quarter of this spend will be on credit cards as consumers delay payment for over £9bn worth of shopping. Overall, this figure is dwarfed by 38% of consumers that are more comfortable using debit cards spending more than £13bn. However, using a debit card could mean that people miss out as credit card customers can benefit from an average interest free period of 56 days, section 75 protection against issues with purchases and benefits such as cashback and rewards.
Plastic Fantastic online
More than a quarter (26%) of all plastic transactions were forecast to be carried out online totalling £342 million, up 50% from £228 million on the same day in 2012. In total, 91% of consumers shopping online were expected to use a PC but almost one in ten purchases were expected to have been made using a smart phone or tablet. Overall mobile shopping was predicted to increase by 238% on Plastic Fantastic day rising from almost £9 million in 2012 to £30 million this year. Yet again technology causes pain for the high street as spend offline on Friday 13th is expected to fall by 5%.
When it comes to payment methods for online shopping, the credit/debit card usage ratio swings favourably towards credit. Throughout December, 45% of people will use credit cards online compared to 43% on debit which is a trend that is set to continue reaching 46% and 42% respectively by 2018. This has not always been the case, in 2008 52% of consumers used credit cards to shop compared to 35% on debit.
Will Becker, CEO and co-founder of TotallyMoney.com comments: “Another great day for retailers following the huge success of Black Friday and Cyber Monday. However, these well established and well publicised dates are becoming self-fulfilling prophecies as retailers focus marketing campaigns and offers around them to cash in on the hype. Friday 13th is also a big deal for retailers as reports indicate that Cyber Monday generated £600 million for online retailers, this is a third less than the £870 million spent on cards on ‘Plastic Fantastic’ day. Let’s hope providers can cope with the sharp increase in transactions and consumers are not left high and dry as they were on Cyber Monday.
“There is still a trend amongst consumers to reach for their debit card to pay for purchases instead of credit cards. With 61% of all adults owning a credit card it seems a shame to miss out on benefits such as Section 75 protection and potential cashback and reward deals that support a large proportion of today’s credit cards. Credit cards can be the best form of payment if consumers use them responsibly and only spend what they can afford to pay off. In an ideal world we would like to see people carrying out all their spending on a cashback credit card, potentially receiving an average of 1% for every purchase made if they pay their bill off in full every month.”
To research the best credit card deals available, visit Totallymoney.com. The website enables consumers to see exactly how much money they will earn or save by switching to the best deals based on annual spend, borrowing and repayments. It also identifies which of these deals consumers are actually eligible for currently a major inefficiency with rejection rates hitting 70%.