Total spending on debit and credit cards rose in 2008, the figures show
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UK consumers turned to their debit cards in 2008 as credit use continued to plateau and cheque use slumped, payments association Apacs has said.
The body said that while spending on credit cards rose only slightly from £124bn in 2007 to £126bn, debit card spending rose 9% to £245bn from £224bn.
Debit cards accounted for nearly three-quarters of all transactions with plastic cards during the year.
The decline of cheques continued, with use down 10.4% on the previous year.
Plastic spending
The effect of the credit crunch can be seen in the Apacs figures that show the number of credit card holders and cards in issue each fell by just over 2% in 2008 compared with 2007.
The number of debit cards in circulation in 2008 overtook the number of credit cards.
Apacs said that in 2007 there were 72 million debit cards in circulation and 73 million credit and store cards. In 2008 there were 75 million debit cards and 71 million credit cards.
The number of cash machine withdrawals rose slightly.
In May last year, the group that monitors ways of spending, the Payments Council, said the cheque was in "irreversible decline" after 350 years of use.
With fewer High Street stores accepting cheques, the number of transactions made by cheque fell steeply again in 2008.
But supporters of the cheque have been giving this form of payment their support on the anniversary of one of the earliest examples of the cheque.
"Until there is greater transparency over the costs involved in processing cheques and suitable alternative ways to pay small businesses and individuals the cheque will celebrate many more birthdays," said Stephen Ley, partner and payments risk expert at Deloitte.
Future of cheques
The Payments Council is set to outline the future for cheques and the expansion of payments made by a mobile phone in the coming weeks.
But Phil Orford, chief executive of the Forum of Private Business (FPB), said a delay was needed before killing-off the cheque until viable alternatives were in place.
"Even in a world filled with electronic telecommunications, many small businesses still rely on payment by cheque," he said.
A survey of its members suggested that "customer forces" would be the most likely issue to determine when cheques were phased out.
Mr Orford said he was keen for the Payments Council to offer information and support to small businesses to ensure a smooth transition towards electronic payments.
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Even in a world filled with electronic telecommunications, many small businesses still rely on payment by cheque
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