FICO UK Credit Card Market Report: November 2022

Rhea-AI Summary

The FICO report on UK card trends for November 2022 indicates a mixed outlook for consumers and lenders. Consumer spending rose by 1.9% month-over-month, averaging £755. However, the number of accounts missing two or three payments increased by 14.8% and 10.3% percent, respectively, raising concerns for lenders. Additionally, the percentage of payments made towards the balance decreased by 2.8%, suggesting ongoing financial strain. Although fewer accounts missed just one payment, the overall trend suggests that consumers are increasingly struggling with credit management as inflation and rising interest rates continue to impact disposable income.

Positive

• Average UK Credit Card Spend increased by 1.9% month-on-month to £755.
• Accounts missing one payment decreased by 4.2%.

Negative

• 14.8% increase in accounts with two missed payments year-on-year.
• 10.3% increase in accounts with three missed payments year-on-year.
• Percentage of payments to balance dropped by 2.8%, indicating financial pressure.

Increased spend and careful credit management kick in for the festive season, but cardholders with two missed payments continued to rise

LONDON--(BUSINESS WIRE)-- FICO’s latest report of UK card trends — for November 2022 — suggests that consumers managed their credit card debt to keep lines of credit open for the festive season as spend increased month on month. However, a continuing trend in those missing two or three payments will be a concern for lenders.

Highlights

• Average total sales in November reversed the downward trend seen over the previous few months, to be 1.9 percent higher than October 2022 at £755
• The percentage of payments to balance dropped by 2.8 percent in November, suggesting continued pressure on disposable income
• Accounts missing one payment dropped by 4.2 percent
• Year-on-year there were 14.8 percent more accounts with two missed payments and 10.3 percent more accounts with three missed payments
• The reliance on credit cards for cash withdrawals dropped, month-on-month, by 10.4 percent

FICO comment

Analysis of the largest consortium of UK cards data shows that November was a mixed story when it came to credit card spend and debt management. On one hand, typical festive spending was evident; but there were also signs that those already struggling to manage financial commitments were further stressed.

The percentage of cardholders missing one payment decreased for the second month in a row, although it is 9 percent higher than 2021. But there has also been an increasing trend since May 2022 for customers missing two payments and since June 2022 for those missing three payments.

Year on year the trend will also be a concern to lenders, with a 14.8 percent increase for those missing two payments since November 2021. This is likely to be driven by a combination of the exhaustion of savings built up during the pandemic, increasing interest rates and continued high levels of inflation. Going back to November 2019 — pre-pandemic — the percentage of customers missing one, two and three payments was higher than it is now. However, it is important to note that the average balance of two and three missed payments was lower three years ago.

Another sign of financial pressure is the percentage of payments to balance. This dropped again in November by 2.8 percent to 39.3 percent, and is down 1.5 percent year on year. This measure is expected to keep dropping as consumers’ savings reduce and cost-of-living pressures are expected to continue well into 2023.

Lenders can use segmentation analysis on their portfolios to ensure that their web and mobile applications encourage consumers in distress to make contact at the first indications of difficulty, and to consider establishing special payment plans for those struggling to stay on top.

Key Trend Indicators – UK Cards November 2022

Metric		Amount		Month-on-Month Change		Year-on-Year Change
Average UK Credit Card Spend		£755		+1.9%		+3.2%
Average Card Balance		£1,585		+0.9%		+4.3%
Percentage of Payments to Balance		39.3%		-2.8%		-1.5%
Accounts with One Missed Payment		1.4%		-4.2%		+9%
Accounts with Two Missed Payments		0.3%		0%		+14.8%
Accounts with Three Missed Payments		0.2%		+8%		+10.3%
Average Credit Limit		£5,545		+0.6%		+2.3%
Average Overlimit Spend		£90		-3.2%		-24%
Cash Sales / Total Sales		0.9%		-10.4%		-32%

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 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/20230124005107/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 on UK card trends indicate for November 2022?

The FICO report shows an increase in consumer spending by 1.9% to £755, but also a rise in accounts missing payments, indicating financial strain.

How much did the average UK credit card spend change in November 2022?

Average UK credit card spend rose by 1.9% month-on-month in November 2022.

What percentage of payments to balance dropped in November 2022 according to FICO?

The percentage of payments to balance decreased by 2.8% in November 2022.

What are the concerns raised for lenders in the FICO November 2022 report?

The report highlights a 14.8% increase in accounts with two missed payments and a 10.3% increase in accounts with three missed payments, raising concerns for lenders.

How do inflation and interest rates impact consumer credit management according to FICO's findings?

The findings suggest that rising inflation and interest rates are contributing to increased financial pressure on consumers, affecting their ability to manage credit.