Outstanding balances on credit card accounts fell by 16.8% in the 12 months to December 2020, new figures published by UK Finance have revealed.

This was the fifth successive month in which repayments have outstripped borrowing, and the largest drop over a 12-month period since the pandemic began.

The banking body suggested the trend can be attributed to people choosing to pay off debt or reduced usage of credit facilities.

In total, 1.7 billion debit and credit card transactions were made in the UK during the month, 12.1% more than in November, but 9.6% fewer than in December 2019.

The UK Finance figures showed that total credit and debit card spending reached £64.4bn during December, a level 9.5% higher than the previous month and 0.7% higher than the year before. Online card spending also totalled £21.7bn last December, which accounted for 33.8% of total spending in the UK, and reflected a rise from 28% in comparison to December 2019.

Furthermore, the number of contactless card payments continued to grow as people took advantage of the higher £45 limit for transactions. The total value of contactless payments in December reached their highest recorded level at £12.2bn, which reflected a 64.7% increase compared to December 2019.

UK Finance managing director of personal finance, Eric Leenders, commented: “December 2020 saw, for the time of year, a record proportion of shopping carried out online, as coronavirus restrictions forced more people to do their Christmas shopping from home than on the high street.

“At the same time, the value of contactless payments reached a record high in December, with customers taking advantage of the higher £45 payment limit.

“Overall card spending in December 2020 was higher than the year before, while aggregate credit card balances continued to fall in the run up to Christmas, reflecting the increased levels of household savings for those who have been less financially affected by the pandemic.”

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