Due to the coronavirus pandemic, many consumers kept their cash in their pockets and instead opted to use their cards in 2020-21; whilst contactless payments accounted for 27% of these transactions.
A quick and easy way to pay for goods and services, contactless technology has revolutionised how we spend our money; however, it’s not without its dangers.
Here’s how contactless payments can lead to bad debt and the warning signs you should look out for.
Contactless Payments and Debt
More than 8 out of 10 payments made by consumers are spontaneous. Made at a whim and in the spare of the moment, contactless payment has somewhat facilitated the compulsive shopper who, without serious checks and balances, can find themselves in serious financial trouble due to the easy access to funds.
Furthermore, the contactless limit was hastily raised at the start of the pandemic to £45 per use; and, MPs are planning to increase the limit again to £100 later this year. Indeed, this could have a negative impact on those who already struggle with debt, spending and managing their finances.
Payments made via smartphones and other digital devices also increased, primarily among the younger generations. This significant increase also coincides with the rise in young people in debt; indeed, 18–25-year-olds have an average debt to income ratio of almost 70% – not to be helped with the increase of the contactless payment limit.
There’s no denying, indeed, that the pandemic has massively “impacted UK payment markets,” said the UK Finance Regulator.
How to Spot When Contactless Payments Are Becoming a Problem
It is estimated that almost half of the UK adult population have accumulated some type of debt. So, if you owe money, you are not alone. For those struggling to deal with debts, be it credit card debt or otherwise, there is help available.
But, what are the signs you should look out for when concerning contactless payments? Be it compulsive spending habits or delving deep into your overdraft every month without thinking, contactless payments can act as the gateway to bigger, more substantial financial problems.
We have long known that people spend more using cards than cash, with people shown to be prepared to pay over twice as much for products and services on card rather than cash. What’s more, this then means that people are more than twice as likely to put themselves in debt. This could be a warning sign, even more so if you’re prepared to pay twice as much or, more than likely, not think about the amount you’re paying.
Trust the Debt Recovery Experts
Established in 2009, our specialist private debt recovery team are experts in their field and have seen the numerous changes and alterations to the UK payment markets. With over 75 years’ combined experience in the industry, we know how to both recover debt card debt, but also help anyone struggling with it.
We start by listening to you, discussing the circumstances that underpin your debt. So, if you’re struggling with contactless payment debt, or are owed money and want to get it back, take decisive action and instruct Cobra today on 0151 526 4222.
Let’s get started!