Data demonstrates cost-of-living pressures across spend and missed payments as UK consumers battle to manage finances

LONDON--(BUSINESS WIRE)--Apr. 27, 2023-- The latest data from FICO on UK credit card trends illustrates the financial balancing act many consumers are facing. Average card spend has increased month-on-month and year-on-year. Higher prices for day-to-day purchases will be reflected in this increase. UK consumers are also paying off less of their outstanding balance, indicating the squeeze on personal budgets.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230427005063/en/

There are, however, some positive signs of financial management. The percentage of accounts missing one payment dropping significantly month-on-month in February after two months of high increases. The number of accounts missing two payments has also seen the first significant drop since May 2022. The big question for lenders will be whether these patterns are sustained over the coming months. Diligent account management will be critical, particularly as the new Consumer Duty Guidance comes into force in the summer.

Highlights

• Average total sales up 3.7 percent compared to January 2023 at £785
• Percentage of payments to balance dropped by 4.1 percent month-on-month
• Percentage of accounts missing one payment decreased by 15.6 percent compared to January 2023
• Percentage of accounts with two missed payments decreased 12.6 percent compared to January 2023, although 25 percent higher than February 2022
• Accounts missing three payments continued to rise, up 27.4 percent year-on-year
• Average balances across all accounts up 8.7 percent year-on-year to £1,660

FICO comment

Analysis of the largest consortium of UK cards data shows consumers are continuing to face a difficult balancing act to manage their finances as inflation remains a significant factor. Lenders will be vigilant to how these behaviours develop over the coming months.

As living standards continue to be squeezed, it’s not surprising that the percentage of payments to balance has dropped consistently since May 2022. This trend is likely to continue given the current economic pressures. Interestingly though, the current percentage of payments to balance — at 37.8 percent — is considerably higher than before the pandemic, when it was around 30 percent.

How consumers manage their existing financial commitments is also crucial to monitor in the current climate. The fact that the percentage of customers missing one payment decreased significantly in February 2023 — a typical behaviour post-Christmas — will be welcomed by lenders after two months of sharp increases. The percentage of cardholders missing two payments also dropped significantly, but with the proportion 25 percent higher than February 2022 it will be interesting to see whether there is any uptick in March and whether the increase month-on-month seen for the average balances of those customers missing one and two payments starts to reduce.

The percentage of customers missing three payments has significantly increased since June 2022. With a 27.4 percent increase compared to February 2022, lenders will want to implement the best support for these vulnerable customers. Specialised collections support and collections departments will need to ensure they have enough experienced collectors.

Key Trend Indicators – UK Credit Cards February 2023

Metric	Amount	Month-on-Month Change	Year-on-Year Change
Average UK Credit Card Spend	£785	+3.7%	+11.4%
Average Card Balance	£1,660	+0.6%	+8.7%
Percentage of Payments to Balance	37.8%	-4.1%	-2.3%
Accounts with One Missed Payment	1.4%	-15.6%	+0.7%
Accounts with Two Missed Payments	0.3%	-12.6%	+25.1%
Accounts with Three Missed Payments	0.2%	+4.3%	+27.4%
Average Credit Limit	£5,550	-0.4%	+1.4%
Average Overlimit Spend	£90	+1.1%	-24.6%
Cash Sales / Total Sales	0.9%	+0.7%	-32.8%

Source: FICO

These card performance figures are part of the data shared with subscribers of the FICO® Benchmark Reporting Service. The data sample comes from client reports generated by the FICO^® TRIAD^® Customer Manager solution in use by some 80 percent of UK card issuers.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in nearly 120 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions rental cars are in the right place at the right time.

Learn more at https://www.fico.com

FICO and TRIAD are registered trademarks of Fair Isaac Corporation in the U.S. and other countries.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230427005063/en/

FICO UK PR Team
Wendy Harrison/Parm Heer/Matthew Enderby
ficoteam@harrisonsadler.com
0208 977 9132

Source: FICO