Spending and balances follow usual patterns although signs of financial stress seen in 8.4% increase in cardholders missing one payment and 2.3% rise in cash withdrawals on credit cards

LONDON--(BUSINESS WIRE)--Jul. 25, 2024-- The FICO UK Credit Card Market Report for May 2024 shows consumers following the usual annual patterns for spending and managing their credit card balances. Typical of late Spring, the percentage of balances paid rose in May, leading to lower average outstanding balances. Spending also fell. However, if consumers continue to follow seasonal trends, spend is likely to rise in the summer months, potentially leading to fewer balances being fully paid.

Highlights

• Credit card spending fell 2.9% from April to May 2024, now standing at an average of £805, however it was still 0.6% higher than May 2023
• In line with lower spending, average balances were 0.3% lower in May than April, but 6.3% higher than May 2023
• After falling from March to April, the number of cardholders who missed one payment increased by 8.4% from April to May 2024
• The average balance for cardholders missing one payment has remained higher year-on-year for two years, currently standing at £2,225
• The number of consumers withdrawing cash on their credit cards rose by 2.2% month-on-month, to 3.3% in May, another indicator of potential financial stress

FICO Comment

Although inflation remained high, spending fell from April to May. However, as the Summer holiday season approaches, spending is expected to follow the usual pattern and increase over the coming months. As spending increases, it is likely that payments to balance will fall, leading to higher average balances and requiring further vigilance from lenders.

Missed payments remain a particular area of interest for lenders, increasing by 8.4% in May, after a drop in April. Overall, this figure has been trending upwards since August 2022.

Some 1.6% of cardholders missed one payment in May, a 2.5% year-on-year increase. Some 0.3% missed two payments, which was a 6.5% increase on May 2023. However, 8.1% fewer cardholders missed two payments than in April, which was to be expected following a drop in those missing one payment in April and therefore not rolling forwards in delinquency.

The percentage of cardholders missing three payments continues to trend up, having increased for three consecutive months. In May 2024, there was a 4.1% increase on the previous month, to 0.2%, which represents a significant year-on-year increase of 13.1%.

With missed payments rising, the average missed payment balances for one, two and three month levels remain higher year-on-year. For cardholders who have missed one payment, the average balance has now been higher year-on-year for more than two years, currently standing at £2,225. The average balance for customers missing two or three payments has been higher year-on-year since August 2023, standing at £2,685 and £3,030 respectively. These rises may be due in part to inflation.

The other indicator of financial stress is cash withdrawals on credit cards. Since March, cardholders have been increasingly withdrawing cash on their credit cards, with 3.3% of customers doing so in May 2024, a 2.2% month-on-month increase. However, the rate does remain 2.6% lower than May 2023.

Key Trend Indicators – UK Cards May 2024

Metric	Amount	Month-on-Month Change	Year-on-Year Change
Average UK Credit Card Spend	£805	-2.9%	+0.6%
Average Card Balance	£1,780	-0.3%	+6.3%
Percentage of Payments to Balance	37.79%	+4.3%	-4.2%
Accounts with One Missed Payment	1.6%	+8.4%	+2.5%
Accounts with Two Missed Payments	0.3%	-8.1%	+6.5%
Accounts with Three Missed Payments	0.2%	+4.1%	+13.1%
Average Credit Limit	£5,690	+0.4%	+2.2%
Average Overlimit Spend	£90	+3.5%	-4.3%
Cash Sales as a % of Total Sales	0.89%	+2.2%	-2.6%

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% of UK card issuers. For more information on these trends, contact FICO.

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For further comment on the FICO UK Credit Card activity contact:
FICO UK PR Team
Wendy Harrison/Parm Heer
ficoteam@harrisonsadler.com
0208 977 9132

Source: FICO