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Cash going out of fashion

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by Jan Harris
Cash going out of fashion

Cards are replacing cash as consumers’ preferred payment method, according to new research by Clydesdale Bank and Yorkshire banks.

A few years ago people would hesitate to use a card to make a small value purchase, but not anymore.

Around 29 per cent of people in the UK now draw less than 10 per cent of their income in cash, and 30 per cent usually have less than £10 in cash in their purse or back pocket.

Just 5 per cent of people carry more than £50 in cash, the study suggests.

Cash payments have been largely replaced with on direct debits, card payments, online transactions and standing orders.

Steve Reid, retail director at Clydesdale and Yorkshire Banks, said: “Cash is clearly no longer king when it comes to the UK’s spending habits.

“Ten years ago, most people probably wouldn’t have thought about using their cards for a low value purchase, now it is the norm for many people.

“Whether it is due to convenience or a way of keeping track of finances, more people are opting to use payment methods other than cash.”

However, credit card usage is also falling according to the Bank of England.

Figures for July show that spending on credit cards fell by £147 million, the biggest fall since August 2006.

A spokesman for the UK Cards Association said: “It’s completely normal to see short term fluctuations in the amount of credit card debt from month to month, or even quarter to quarter, but in terms of longer term trends we know that the £54.6 billion currently outstanding accounts for less than 4% of UK consumer borrowing, and has fallen from a peak of £69 billion in February 2006.

“Credit cards still offer consumers benefits and protections that other ways to pay can’t match, but the current financial environment has meant that people are becoming more cautious in their use of credit and, if they can, are trying to pay back their borrowings,” he added.

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News posted: September 5, 2012

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