FICO UK Credit Card Market Report: January 2023

Rhea-AI Summary

Recent data from FICO reveals a nuanced landscape for UK consumers' credit behavior as of January 2023. While retail sales experienced a slight uptick and inflation showed signs of easing, a significant rise of 13.6% in accounts with two missed payments raises concerns for lenders. The average balance of accounts facing two missed payments decreased by 1.9%. Overall, the average credit card balance dropped by 0.6% to £1,650. The month saw a 0.7% decline in accounts missing one payment, suggesting a complex recovery post-holidays amidst ongoing economic challenges.

Positive

• Average balance of two missed payments decreased by 1.9% month-on-month.
• Number of consumers missing one payment fell by 0.7% month-on-month.

Negative

• Accounts with two missed payments increased by 13.6% month-on-month.
• Average total sales per card down 8% compared to December 2022.

Start of the new year presents mixed picture of debt management by UK consumers

LONDON--(BUSINESS WIRE)-- New data from FICO on UK card trends appears to reflect the contrasting picture of the economy. January saw inflation slightly pegged back compared to the end of 2022; retail sales also improved marginally in the new year. In a similar vein, the FICO data shows that many of those consumers missing one credit card payment in December continued to struggle with their debts in the new year, with a marked increased in two missed payments. However, the balance for two missed payments dropped, potentially reflecting curtailed spending.

FICO data shows that many UK consumers continued to struggle with their debts in January, with a marked increased in two missed payments (Graphic: FICO)

Highlights

• Average total sales per card down 8 percent compared to December 2022 at £755
• Percentage of credit card accounts with two missed payments 13.6 percent higher than December 2022
• Average balance on credit card accounts with two missed payments was 1.9 percent lower month-on-month
• Credit card accounts missing one payment fell month-on-month by 0.7 percent
• Average balances across all accounts dropped by 0.6 percent month-on-month to £1,650

FICO comment

Analysis of the largest consortium of UK cards data shows UK consumer credit behaviour in January 2023 generally following typical seasonal patterns. However, there was a spike in those customers missing two payments — 13.6 percent month on month — which could ring alarm bells for lenders.

December saw more accounts falling one month behind, and the increase in two missed payments in January appears to be moving the delinquency forwards. With Consumer Duty a priority for the FCA, lenders will want to ensure they are taking the right actions with those customers showing signs of financial difficulty. There may, however, be some comfort in the fact that the average balance of two missed payments continues to decrease and has been dropping since October 2022.

Lenders will also welcome the fact that the number of consumers missing one payment in January dropped month on month; usually in the first month of the new year there is an increase in one-month missed payments. However, this needs to be balanced against the fact that we saw a high increase in one-month missed payments in December, so this is more of a levelling off than a reduction and the percentage is still high. The percentage of payments to balance has also increased by 2.4 percent month-on-month after decreasing from September 2022.

With an increase usually seen in this behaviour post-Christmas this will be an interesting measure to track throughout the year as the cost of living crisis continues.

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/20230323005064/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 does the latest FICO report say about credit card payments in January 2023?

The FICO report shows a 13.6% increase in accounts with two missed payments in January 2023, alongside a decrease in average balances.

How have UK retail sales fared according to FICO's January 2023 report?

UK retail sales improved marginally in January 2023 as per FICO's data.

What was the average credit card balance reported by FICO for January 2023?

The average credit card balance dropped to £1,650 in January 2023.

What percentage of UK consumers missed two credit card payments in January 2023?

The report indicates a 13.6% increase in credit card accounts with two missed payments in January 2023.

What challenges are highlighted in FICO's January 2023 report regarding UK consumers?

The report indicates ongoing struggles for UK consumers with rising missed payments and overall debt management issues.