FICO UK Credit Card Market Report: October 2022

Rhea-AI Summary

The latest FICO report on UK card trends highlights a significant tightening of consumer spending amid rising living costs. In October 2022, average credit card spend decreased to £740, a 5% drop from September. Active credit card balances also fell by 1.5% to £1,570. Payments made towards balances declined by 0.8%, and there was a year-on-year increase in missed payments across all cycles, particularly a 6.8% rise in accounts with two missed payments. Conversely, consumers reduced cash withdrawals by 5.5%, indicating increased financial cautiousness.

Positive

• Reduction in reliance on credit cards for cash withdrawals by 5.5% month-on-month and 22.3% year-on-year.
• Small rebound in GDP reported at a 0.5% increase despite previous negative trends.

Negative

• Average credit card spending dropped by £70 over two months.
• Year-on-year missed payments increased across all cycles, with two missed payments rising by nearly 7%.
• Percentage of payments to balances decreased by 0.8% month-on-month, continuing a downward trend.

Average spend drops by £70 in space of two months as consumers tighten their belts; missed payments higher than same time last year

LONDON--(BUSINESS WIRE)-- FICO’s latest report of UK card trends — for October 2022 — illustrates the push and pull of personal finances as consumers attempt to manage existing credit commitments while facing an increased cost of living.

Highlights

• Average total sales were 5 percent lower than September at £740
• The average active balance on credit card accounts also dropped in October to £1,570 – 1.5 percent lower than September
• The percentage of payments to balance dropped by 0.8 percent in October, continuing a trend seen since May
• Year-on-year missed payments have increased across all payment cycles, with two missed payments showing the greatest year on year growth at nearly 7 percent
• Those missing one payment in September struggled to stay on top of their debt as a 7 percent month-on-month increase in two missed payments recorded
• But consumers reduced reliance on credit cards for cash withdrawals with a 5.5 percent drop month-on-month

FICO comment

Analysis of the largest consortium of UK cards data illustrates the financial challenges faced by many people, as pandemic savings dwindle and the cost-of-living escalates. While the latest ONS data¹ reports a small 0.5 percent rebound in GDP for the month, in the three months to October GDP shrank by 0.3 percent compared with the previous three months. This drop in spending is also reflected in the FICO data.

Average spend across credit card accounts dropped by £70 over September and October. And the percentage of payments to balance – reflecting both earnings and savings to stay on top of credit commitments – dropped by 0.8 percent month-on-month.

But perhaps most significant for credit providers is the year-on-year trend in missed payments. Across all payment cycles – one, two and three missed payments – there has been an increase over October 2021.

With two missed payments increasing month on month by 6.8 percent in October, credit providers will be wanting to understand the causes to offer the right support to account holders.

There is, however, one area where financial prudence is evident. The percentage of accountholders using their card to withdraw cash dropped month-on-month by 5.5 percent in October and, reflecting a pattern seen all year, by 22.3 percent year-on-year. It appears that cardholders are aware of the high cost of using credit cards to withdraw cash due to the higher APR charged.

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 – October 2022

Metric	Amount		Month-on-Month Change		Year-on-Year Change
Average UK Credit Card Spend	£740		-4.7%		+5.1%
Average Card Balance	£1,570		-1.5%		+4.4%
Percentage of Payments to Balance	40.5%		-0.8%		+0.6%
Accounts with One Missed Payment	1.5%		-2.4%		+4.3%
Accounts with Two Missed Payments	0.3%		+6.8%		+6.6%
Accounts with Three Missed Payments	0.2%		-1.3%		+1.2%
Average Credit Limit	£5,510		+0.3%		+1.9%
Average Overlimit Spend	£95		+2.2%		-24%
Cash Sales / Total Sales	1%		-5.5%		-22.3%

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.

¹ https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/october2022

View source version on businesswire.com: https://www.businesswire.com/news/home/20221220005075/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 indicate about UK credit card spending in October 2022?

The FICO report reveals that average credit card spending in October 2022 fell to £740, a 5% decrease from September.

How have missed payments changed according to FICO's October 2022 report?

The report shows an increase in missed payments across all cycles, with a notable rise of 6.8% for accounts with two missed payments compared to last year.

What was the average active balance on credit card accounts in October 2022?

In October 2022, the average active balance on credit card accounts was £1,570, marking a 1.5% decrease from September.

How much did average credit card spending drop from September to October 2022?

Average credit card spending dropped by £70 from September to October 2022.

What trend was observed in cash withdrawals using credit cards according to FICO?

FICO reported a 5.5% month-on-month decrease in cash withdrawals using credit cards, along with a 22.3% decrease year-on-year.