FICO UK Credit Card Market Report February 2022

Rhea-AI Summary

FICO's February 2022 analysis of UK credit card trends shows a 5.38% increase in average spend to £705, and a 1.11% rise in average balance to £1,527. Although the percentage of payments to balance dropped by 6.67%, indicating potential financial stress, fewer accounts missed payments compared to January. The report suggests consumers may be relying more on credit amidst rising costs, with vigilance in future repayment trends crucial for lenders. These insights come from FICO's Benchmark Reporting Service, utilized by 80% of UK card issuers.

Positive

• Average card spend increased by 5.38% month-on-month and 28.88% year-on-year.
• Average card balance rose by 1.11% month-on-month.
• Reduction in accounts with missed payments indicates consumer effort to manage credit.

Negative

• Percentage of payments to balance fell by 6.67%, suggesting potential financial strain.
• Increased spend and balance may indicate growing reliance on credit amid cost pressures.

Impact of cost of living rise not yet evident in credit card repayments

LONDON--(BUSINESS WIRE)-- Global analytics software provider FICO today released its analysis of UK card trends for February 2022. While the data follows typical post-seasonal spend and repayment patterns, it’s as yet unclear whether pandemic savings are masking the early impact of the cost of living hike.

Highlights

• Average card spend climbs by over 5 percent compared to January and nearly 30 percent compared to February 2021
• Small lift in average active balance – just over 1 percent – follows typical post-seasonal behaviour
• But percentage of payments to balance drops by more than 6 percent, which could be early signs of financial stress
• Percentage of accounts with one and two months missed payments drops compared to January – another typical behaviour after the Christmas period

Key Trend Indicators – UK Cards February 2022

Metric			Amount			Month-on-Month Change			Year-on-Year Change
Average UK Credit Card Spend			£705			+5.38%			+28.88%
Average Card Balance			£1,527			+1.11%			+4.31%
Percentage of Payments to Balance			38.73%			-6.67%			+18.48%
Accounts with One Missed Payment			1.41%			-8.61%			+6.49%
Accounts with Two Missed Payments			0.25%			-15.55%			-13.34%
Accounts with Three Missed Payments			0.17%			+0.84%			-17.21%
Average Credit Limit			£5,473			+0.42%			+2.51%
Average Overlimit Spend			£122			+0.83%			-19.74%
Cash Sales / Total Sales			1.28%			-5.68%			-13.41%

FICO Comment

The cost of living hike that started to become evident in February did not have an immediate impact on credit repayment behaviours; indeed, the percentage of accounts missing payments reduced in accounts with one and two missed payments.

However, with average spend showing a more than 5 percent increase month-on-month, and the average card balance also increasing by more than 1 percent, there could be a risk that consumers started to rely on credit during February to counteract pressure on disposable income. The rapid increase of prices for essentials may have contributed to the increased average spend and the increased average card balance, yet payment trends remain reassuring that consumers are trying to keep balances relatively lower than in pre-pandemic times. Remaining vigilant to repayment trends over the next few months will be critical for lenders to ensure vulnerable households are given the support they need.

Customers paid down credit cards when stimulus payments hit the marketplace. Given the dependence on online spend and online ordering, having sufficient “open to buy” was a critical survival mechanism. Seasonal trends are still visible, but it’s clear that consumers are still in pay down mode.

Lockdown savings and the inability to spend as much, especially on large purchases such as holidays, has helped to reduce balances. Consumers may be keeping available credit for when they do have the confidence to book holidays.

These card performance figures are part of the data shared with subscribers of the FICO® Benchmark Reporting Service produced by FICO® Advisors, the business consulting arm of FICO®. 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 more than 120 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and 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/20220426005094/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 was the average credit card spend in the UK for February 2022?

The average credit card spend in the UK for February 2022 was £705.

How much did average card balances increase in February 2022?

Average card balances rose by 1.11% month-on-month to £1,527.

What does the drop in percentage of payments to balance indicate?

The drop of 6.67% in payments to balance may indicate potential financial stress among consumers.

How did the number of missed payments change in February 2022?

The percentage of accounts with one and two missed payments decreased compared to January 2022.

What is the significance of FICO's analysis on the UK credit card market?

FICO's analysis helps lenders understand consumer behavior and repayment trends amidst rising costs.