Outstanding balances on credit card accounts have grown by 3.8% in a year, new data published by UK Finance has revealed.

The figure refers to the 12 months in the year to January 2022.

UK Finance also reported that there were 292.4 million credit card transactions in January. This total was 47.9% more than in January 2021 – when the UK was in a winter lockdown – and 2.6% up on January 2020. The total spend on credit cards of £16.2bn was 51.6% higher than January 2021, but 6% on January 2020.

The banking body also reported figures for debit cards, with 1.7 billion debit card transactions recorded in January. This was a 37% increase on January 2021 and 15.5% higher than January 2020. The total spend on UK debit cards stood at £57.4bn for the month, which was 14.8% higher than January 2021, and 3.4% up on January 2020.

Commenting on the data, Hargreaves Lansdown senior pensions and retirement analyst, Helen Morrissey, said it shows further signs that the “pandemic savings boom is unravelling”, with outstanding credit card balances on the rise after months of decline.

“Subdued spending habits during the pandemic meant we could put more away for a rainy day and we were less likely to put purchases on the plastic and not pay them off in full,” Morrissey said.

“There was always going to be something of a financial hangover post-Christmas, but the concern is that these outstanding balances are also a sign that the rising cost of living is starting to bite. We are increasingly having to burn our way through our lockdown savings to meet everyday expenses and using our credit cards more to fill any gaps.

“The pandemic has also had a huge effect on how we use our cards with contactless transactions continuing to rise steeply. Many shops were reluctant to handle cash during lockdown and it looks to have fallen further out of favour with the recent increase in contactless limits set to £100.”

Co-head of Projective Group’s payments practice, Jacob Rider, added: “With inflation levels at a 30-year high, these statistics may well continue to worsen as people around the UK fall into further debt to cover these rising costs, which could lead to serious problems further down the line when repayments are due.”

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