A report has revealed that due to the current credit crunch crisis, people are no longer using their credit cards; instead they are turning to their debit card in an attempt to keep their debt down. It is therefore expected that debit card spending will increase by 14% to hit £438 billion, whereas credit card spending will drop by 1.1% during 2008 to £120 billion.

This is because people are spending less on big items and as a result nearly three-quarters of all card purchases made in 2008 will be on direct debits, with credit cards used for only 20% of transactions.

Andrew Fabricius stated: “The fall in the value of credit card transactions reflects the fact that consumers are less confident about spending on credit and also are spending less on large items, such as white goods. Particularly with less people moving home, there has been less demand for goods such as household appliances and furnishings, which typically might be purchased with a credit card.”

However, he reminded that credit cards were still popular despite the drop and overall spending on all types of cards is set to increase this year to £594 billion.