FICO UK Credit Card Market Report: December 2022

Rhea-AI Summary

The latest report from FICO reveals significant trends in UK credit card usage for December 2022, amid rising inflation. Average credit card spending surged to £825, a 9% increase from November, while average balances rose by 5% to £1,660. However, the report highlights a troubling trend: the number of cardholders missing one payment surged by 19%. The percentage of accounts with two and three missed payments rose by 19% and 20% year-on-year, respectively. As financial institutions prepare for the FCA's Consumer Duty regulations effective July 31, 2023, the pressure on lenders intensifies, and strategies for contacting customers will become increasingly crucial.

Positive

• Average credit card spending increased to £825, up 9% from November 2022.
• Average card balances rose by 5% month-on-month to £1,660.
• Average credit limit grew by 0.5% to £5,570.

Negative

• Accounts missing one payment increased by 19% month-on-month.
• Percentage of accounts with two missed payments rose by 19% year-on-year.
• Percentage of accounts with three missed payments increased by 20% year-on-year.
• Payments to balance dropped by 2% month-on-month and 4% year-on-year.

Seasonal increases plus higher prices result in festive spending highs and big rise in cardholders missing one payment

LONDON--(BUSINESS WIRE)-- Clear evidence of the impact of inflation on household spending is revealed in FICO’s latest report of UK card trends, for December 2022. While retail sales volumes were widely reported as being down in the last month of the year, the FICO data shows the highest average total credit card spending since its UK Risk Benchmarking records began in 2006. Underlining the financial pressures being faced, December also saw a significant rise in cardholders missing one credit card payment, which will be a particular concern to lenders.

UK credit card spend climbed to a new high in December 2022, according to FICO data. (Graphic: FICO)

Highlights

• Average total sales up 9 percent over November 2022 at £825
• Average balances rise by 5 percent month-on-month to £1,660
• Accounts missing one payment jumped month-on-month by 19 percent
• Percentage of accounts with two missed payments was 19 percent higher than December 2021 and 20 percent higher for three missed payments
• The pattern of falling payments to balance also continued in December 2022 with a 2 percent month-on-month drop and a 4 percent year-on-year decrease

FICO comment

Analysis of the largest consortium of UK cards data shows a convergence of rising prices and dwindling disposable income in December 2022. With average total spend at its highest and late payments rising significantly month-on-month and year-on-year, financial institutions will be particularly concerned as the focus on Consumer Duty heightens.

The Financial Conduct Authority’s (FCA) Consumer Duty rules, which will apply to new and existing products or services that are open to sale or renewal and come into force on 31st July 2023, require firms to act to deliver good outcomes for customers. They must be able to access products and services that meet their needs and offer fair value, as well as receive the support they need, when they need it. This includes financial institutions offering vulnerable customers other products with more suitable pricing etc.

As financial institutions face increasing numbers of late payments they will benefit from using optimised strategies to determine who and when to contact, and omnichannel communications to ensure those messages land. Those with the ability to incorporate digital-first communications will be in a much stronger position to deploy effective collections strategies.

Key Trend Indicators – UK Cards December 2022
Metric	Amount	Month-on-Month Change	Year-on-Year Change
Average UK Credit Card Spend	£825	+9.4%	+8.4%
Average Card Balance	£1,660	+4.7%	+7.2%
Percentage of Payments to Balance	38.54%	-2.03%	-3.55%
Accounts with One Missed Payment	1.7%	+18.7%	+10.6%
Accounts with Two Missed Payments	0.32%	+6.1%	+19%
Accounts with Three Missed Payments	0.19%	+7.3%	+20.2%
Average Credit Limit	£5,570	+0.5%	+2.5%
Average Overlimit Spend	£90	0%	-23.97%
Cash Sales / Total Sales	0.77%	-12.67%	-37.13%
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/20230221005173/en/

For further comment on the FICO UK Credit Card activity contact:

FICO UK PR Team

Wendy Harrison/Parm Heer/Matthew Enderby

ficoteam@harrisonsadler.com

0208 977 9132

Source: FICO

FAQ

What did FICO report about UK credit card spending in December 2022?

FICO reported that the average UK credit card spending reached £825 in December 2022, a 9% increase from November.

How much did average card balances rise in December 2022 according to FICO?

Average card balances rose by 5% month-on-month to £1,660 in December 2022.

What significant trend did FICO note regarding missed payments in December 2022?

FICO noted a 19% increase in cardholders missing one payment month-on-month in December 2022.

What are the implications of FICO's report for lenders in the UK?

The rise in missed payments and increased spending highlights financial strain on consumers, prompting lenders to enhance customer outreach strategies.

When do the FCA's Consumer Duty regulations take effect?

The FCA's Consumer Duty regulations will take effect on July 31, 2023.