FICO UK Credit Card Market Report: December 2023
February 22 2024 - 3:15AM
Business Wire
High prices lead to highest average credit card
spend and balances since FICO records began
The FICO UK Credit Card Market Report for December 2023 reflects
the usual season trends in spending and payments. However, it also
reflects the impact of continued high prices on card balances. This
latest report shows the highest levels of both average spend and
average balances since 2006, when FICO first analysed credit card
use and payments.
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The latest FICO UK Credit Report shows
the highest levels of both average spend and average balances on UK
credit cards since 2006, when FICO first analysed credit card use
and payments. (Graphic: Business Wire)
Highlights
- Average spend increased by 5.9% on the previous month, to
£850
- Average balances rose by 2.2% month-on-month and 7.2%
year-on-year, leading to an average balance of £1,780
- 14.8% more customers missed a credit card payment
month-on-month and 0.5% more compared to the same month in
2022
- There has been a 1.3% decrease in the average balance for those
customers missing one payment
Key Trend Indicators – UK Cards December 2023
Metric
Amount
Month-on-Month Change
Year-on-Year Change
Average UK Credit Card Spend
£850
+5.9%
+2.9%
Average Card Balance
£1,780
+2.2%
+7.2%
Percentage of Payments to Balance
36.6%
-0.2%
-4.9%
Accounts with One Missed Payment
1.7%
+14.8%
+0.5%
Accounts with Two Missed Payments
0.3%
+0.9%
+1.9%
Accounts with Three Missed Payments
0.7%
+7.7%
+5%
Average Credit Limit
£5,615
+0.1%
+0.8%
Average Overlimit Spend
£90
0%
-4.4%
Cash Sales / Total Sales
0.8%
-10.2%
+0.7%
Source: FICO
FICO Comment
Increases in spend always occur in December, and 2023 was no
exception with a 5.9% month-on-month rise, taking the average spend
to £850. This is the highest spend since FICO records began in
2006.
The average balance continued to trend upwards, as expected in
the lead up to Christmas. December 2022 saw record average
balances. In December 2023 that record was broken with average
balances up 2.2% month-on-month and up 7.2% year-on-year. The
average balance now stands at £1,780. It is anticipated that this
trend will fall post-Christmas, however with prices remaining high
lenders will want to monitor closely how much it will fall, and for
how long it will remain lower.
Another pattern typical of December was the amount paid off
credit card balances as shoppers focussed their cashflow on
Christmas spending. In December 2023 the average balance paid off
dropped slightly, by 0.16%, month-on-month. However, this measure
has been trending down since July.
Pre-COVID, the average payment compared to the overall balance
was approximately 30%, but with lockdown and increased savings this
rose to 42%. The FICO data now shows this dropping back, although
it is currently still 6% higher than before the pandemic.
Another sign of pressure on finances was the number of customers
missing one, two and three payments. This increased from November
to December 2023, with the largest increase seen for those missing
one payment: a 14.8% increase month-on-month and a 0.5% increase
compared to 2022. Again, seasonality influences results with
similar volumes expected in January as a result of the
post-Christmas spending hangover. Lenders will also want to be
mindful that higher numbers of customers missing one payment in
December are likely to roll over into two payments in January.
Issuers should note that established customers – those who have
had their credit card between one and five years – are the most
likely to miss payments. This group contains customers whose 0%
offers have expired, and they are now paying off balances at the
standard rate. FICO recommends monitoring this group for signs of
vulnerability and indebtedness. Now is a great time to review
existing collections strategies and examine whether anything more
can be done to proactively identify and assist financially
distressed customers.
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% of UK card
issuers. For more information on these trends, contact FICO.
About FICO
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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, insurance, telecommunications, health care, retail and
many other industries. Using FICO solutions, businesses in more
than 100 countries do everything from protecting 2.6 billion
payment cards from fraud, to improving financial inclusion, to
increasing supply chain resiliency. The FICO® Score, used by 90% of
top US lenders, is the standard measure of consumer credit risk in
the US and other countries, improving risk management, credit
access and transparency. Learn more at www.fico.com.
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Corporation in the U.S. and other countries.
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version on businesswire.com: https://www.businesswire.com/news/home/20240222259009/en/
For further comment on the FICO UK Credit Card activity
contact: FICO UK PR Team Wendy Harrison/Parm Heer
ficoteam@harrisonsadler.com 0208 977 9132
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