FICO UK Credit Card Market Report: May 2023
- Consumers paying off full balance increased month-on-month
- Average credit card spend is higher than previous years
- Credit card delinquency is higher overall
- Percentage of customers missing three payments increased in May
Impact of stubbornly high inflation evident in rising credit card delinquency levels and average spend
More consumers missed at least one payment during May after the rise and fall of March and April. However, counteracting that negative picture, the percentage of consumers paying off their full balance also increased month-on-month.
With the Bank of
Highlights
- Year-on-year, credit card delinquency is higher overall
-
The number of accounts with one missed payment rose by
10.8% month-on-month and9.2% year-on-year -
Accounts missing two payments also remains high compared to 2022 — up
24.5% — and the average balance is also following the pattern of increases over the last three months increasing1.2% month-on-month -
The percentage of customers missing three payments also increased in May — by
2.6% month-on-month and26.6% year-on-year -
In contrast to the missed payments patterns, the percentage of payments to total balance increased by
6% in May to39.4% -
Average spend in May was
6.1% higher than the same month last year and£148 higher than two years ago although it dropped by3.3% after a peak in April, averaging£800. -
The percentage of customers using their credit card to take out cash increased for the third month in a row; up
4% month-on-month and8.6% year-on-year, indicating ongoing financial stress.
FICO comment
The latest FICO data suggests considerable financial volatility among
The month-on-month decrease in spending on credit cards in May could reflect the record high withdrawals from bank and savings accounts reported by the Bank of
Previous concerns around increased spend alongside reduced percentage of payments to balance have been somewhat allayed during May, with lower spend and more accounts paying off more of their outstanding balance. However, the rising number of consumers relying on their credit card to withdraw cash, despite higher APRs for cash withdrawals, indicates significant financial stress could be rising for many people. Typically, it is customers struggling with affordability who tend to use their credit cards to take out cash. As the cost-of-living crisis continues, reliance on credit cards for cash withdrawals may increase further.
As the pressure on finances and increasing interest rates continue, lenders will need to look closely at how customers are managing their existing commitments and remain vigilant for signs that the volatile conditions are impacting affordability.
Key Trend Indicators –
Metric |
Amount |
Month-on- Month Change |
Year-on-Year Change |
Average |
|
- |
+ |
Average Card Balance |
|
- |
+ |
Percentage of Payments to Balance |
|
+ |
- |
Accounts with One Missed Payment |
|
+ |
+ |
Accounts with Two Missed Payments |
|
- |
+ |
Accounts with Three Missed Payments |
|
+ |
+ |
Average Credit Limit |
|
+ |
+ |
Average Overlimit Spend |
|
+ |
- |
Cash Sales / Total Sales |
|
+ |
- |
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
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FICO and TRIAD are registered trademarks of Fair Isaac Corporation in the
_______________
i https://www.bankofengland.co.uk/statistics/money-and-credit/2023/may-2023
View source version on businesswire.com: https://www.businesswire.com/news/home/20230731997162/en/
For further comment on the FICO
FICO
Wendy Harrison/Parm Heer
ficoteam@harrisonsadler.com
0208 977 9132
Source: FICO
FAQ
What is the trend in credit card delinquency?
Did the percentage of consumers paying off their full balance increase?
Is the average credit card spend higher than previous years?
What is the trend in the use of credit cards for cash withdrawals?