More Britons Are Putting Everyday Spending on Credit Cards — And That's a Warning Sign for 2026

Britons are increasingly using credit cards for everyday transactions, as recent data reveals that credit usage and outstanding balances continue to grow even as overall spending remains subdued.

Recent figures on UK card usage show a notable divergence between debit and credit card behaviour. While debit spending has slowed, credit card use and balances are on the rise. These trends suggest changing financial habits and may indicate growing pressure on household budgets.

Credit Cards on the Up

Across the UK and internationally, there were 2.3 billion debit card transactions in the period, up 1.2% year-on-year. Despite the increase in transaction volume, total debit card spend fell by 0.5% to £67.1 billion, indicating more frequent but smaller average purchases.

Conversely, credit cards have demonstrated a much stronger growth trend. Transactions increased by 4.5% over the past year to 403 million, while total credit card expenditure rose by 4.4% to £22 billion during the same period.

The total outstanding balance on all credit cards increased by 8.1% compared to the previous year, reflecting a higher reliance on revolving credit. Although the proportion of balances carrying interest declined slightly, the data indicates a modest improvement in repayment behaviour.

Why Does This Matter?

While overall activity within the card payment ecosystem remains relatively stable, the increasing use of credit cards for daily spending is a noteworthy development. Many consumers seem to be relying more heavily on credit to manage short-term cash flow, especially during periods of financial uncertainty.

Using credit cards for everyday purchases offers flexibility to maintain spending levels without immediate cash outlay, but it also carries the risk of building up debt if balances are not carefully monitored. Failing to manage repayments can lead to higher interest charges and greater financial stress.

Contactless payments have become a significant element of retail transactions. They now account for 66% of credit card transactions and 76% of debit card transactions. In total, there were 1.634 billion contactless transactions, with a combined value of £26.2 billion—marking a 3.6% increase from the previous year.

Usage of contactless technology varies across different card types. Contactless credit card transactions increased by 7.8%, while contactless debit card use decreased by 1.5%. This indicates a faster adoption of contactless payments on credit cards compared to debit cards.

Implications for Consumers and Lenders

This trend highlights the importance of prudent debt management for consumers. While credit cards are highly convenient and offer flexibility, rising debt levels can become difficult for households to manage if repayment habits are not closely observed. Uncontrolled balances can lead to increased interest payments and financial strain.

For lenders and financial technology firms, the shift underscores the need for robust credit risk management. As market penetration grows and payment preferences evolve, providing responsible lending options is vital. Digital-first services, real-time reporting, and advanced analytics will play an increasingly important role in monitoring portfolio performance and ensuring sustainable growth.

The Changing Payment Landscape

The divergence between debit and credit growth also reflects an evolution in household cash flow management. Debit cards continue to be the preferred method for routine spending, but credit cards are increasingly used for added flexibility and convenience.

This transformation suggests that financial institutions must maintain a diverse range of products that cater to varying spending habits and financial circumstances. Contactless payments and embedded digital features are expected to become central to the UK payments market's next phase.