It has been revealed that consumers are becoming more cautious about their means of spending, as the recession deepens.

Industry experts have stated that as a result, shoppers are shying away from using their credit cards to pay for goods, in an attempt to stay on top of their finances.

Credit card drop

According to a leading credit scoring service, figures released by Apacs, the UK's payment association, shoppers are swapping their credit cards for debit cards.

A study by the group found that spending by plastic in the first quarter of 2009 was up 5.4% compared with the same period in 2008, with spending for this year's period totalling £92.4 billion.

However, in this same quarter, spending on credit cards fell by 3%, while debit cards accounted for 74.5% of all spending in the quarter - higlighing a 2% increase in debit card use.

Gross credit card lending to individuals during the first quarter of 2009 amounted to £30.3 billion and repayments were £29.6 billion.

Customers were overall lent 8.7% less and made 7.9% fewer repayments during the first three months in 2009, when the figures were 33.2 billion and 32.2 billion. These figures were said to be somewhat stable with 2008's spending and repaying levels.

Credit Vs. Debit

Neil Munroe, who is the external affairs director at the finance company, explained, the changes in the types of plastic consumers are using to make purchases.

He said: "If you look at the credit card and debit card spend what you are seeing is a lot more cautiousness in consumers in the sense that credit card spending is dropping by three per cent and debit card purchases are on the increase."

"We are seeing a switch which to my mind reflects a cautious consumer probably spending what they have got more than what they are expecting in the future. In terms of credit cards they tend to be used on a basis of future income."

According to figures from the British Retail Consortium, released earlier this month, non-food sales (i.e. internet, mail-order and phone sales) in April were 12.5% higher than a year ago, following the month's uplift in shop sales.

Furthermore, the value of UK retail sales jumped 4.6% on a like-for-like basis and rose 6.3% on a total basis, from April 2008, when sales were very feeble in the cold wet weather after Easter.

These statistics display that while people are still spending, they are being careful to do it with money they already have, rather than borrowing funds on credit.

Mr Munroe also said that the figures for the first quarter should not surprise analysts, as they reflect trends financial experts would expect during a time of a financial downturn.

"It is mirroring what I think we all know is happening - people are spending what they have got rather than borrowing money at the moment [when it comes to] funding purchases," he concluded.