A spring bloom in credit card spending has revitalised consumer spending in April, figures show, suggesting that there may be signs of growth in the economy.
Spending on debit and credit cards leapt by 3.6% in April on the previous year, Barclaycard told The Mail on Sunday.
The lender’s statistics cover around half of all the card payments made in the UK.
But the high street continues to be hit hard, and even supermarkets are feeling a cutback in spending.
DIY stores have profited from a 3.7% in spending as consumers show signs of cutting out expensive servicemen to carry out repairs themselves.
And a rise in spending on visual entertainment, such as cinema tickets, rose by almost a quarter on last year, as consumers look to occasional treats rather than elaborate expenditure, Barclaycard said.
Growth
Valerie Soranno Keating, Barclaycard’s chief executive, told The Mail that that this was the first time since 2011 that consumer spending growth had remained above 2% for three consecutive months.
The National Institute of Economic and Social Research (NIESR), Britain’s leading macroeconomic think-tank, said that UK growth had risen by 0.8% in the three months to April, though it attributed this in part to a weak January.
"Things haven't suddenly taken off," said institute director Jonathan Portes. "The data has improved a little but we would still describe this as a relatively slow recovery."
NIESR economist Simon Kirby said that a technical recovery was not likely until 2015 at the earliest.
The Credit Card Market: What’s on Offer?
Sainsbury's Nectar Low Rate Card has a standard rate of just 7.8%, with no balance transfer fee.
The credit card market is still in reasonable health, especially for those with an excellent credit rating.
For those looking to offload their debts more affordably, Which4U is currently listing five cards which offer 0% on balance transfers for 24 months or more.
Balance transfer fees have crept up over the past year. The market-leading 26-month 0% balance transfer card from Barclaycard will add 3.5% to the balance. So transferring a balance of £3,000, for example, would cost an extra £105.
But this is not without competition. Halifax’s 25-month balance transfer card currently has a fee of just 2.5% for online applicants – a saving of £30 on this example.
If you are likely to make inroads into your debts more quickly, Halifax’s All-in-One card has a 15 month balance transfer for a fee of just 1% for those applying online.
This is also one of the best cards on the market for purchases, offering the same period (15 months) for interest free spending – though minimum payments on the card must still be met.
In the market for low standard rate cards, Sainsbury’s Nectar Low Rate Credit Card is heading the market, at 7.8% APR.
This card allows holders to accumulate Nectar points more quickly (10 points per £1 on Sainsbury’s shopping for the first 3 months) and comes without a balance transfer fee.
Growth in spending does not have to augur warnings that a wave of irresponsible borrowing has descended over the nation once again.
Rather, playing the market and finding good credit card offers helps to keep consumer borrowing both responsible and affordable.
James Booker and Keith McDonald
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