Credit card payments yet to show signs of financial distress

LONDON--(BUSINESS WIRE)--May 31, 2022-- Today, leading applied analytics company FICO released its analysis of UK card trends for March 2022. It appears that repayments remain a priority for credit card holders, suggesting that there will be greater reliance on credit over the coming months as the cost-of-living crisis deepens due to higher inflation.

Highlights

• Average card spend drops marginally by just under 2 percent compared to February
• Small drop in average active balance – just over half a percent
• Percentage of payments to balance, increases by just over 2 percent suggesting pragmatic caretaking of credit card accounts
• Percentage of accounts with one and two months missed payments increases month-on-month

Key Trend Indicators – UK Cards March 2022

Metric	Amount	Month-on-Month Change	Year-on-Year Change
Average UK Credit Card Spend	£691	-1.99%	+23.39%
Average Card Balance	£1,519	-0.54%	+4.13%
Percentage of Payments to Balance	39.63%	+2.32%	+26.25%
Accounts with One Missed Payment	1.64%	+16.51%	+9.67%
Accounts with Two Missed Payments	0.27%	+6.24%	-8.68%
Accounts with Three Missed Payments	0.15%	-7.23%	-17.07%
Average Credit Limit	£5,481	+0.15%	+2.53%
Average Overlimit Spend	£130	+6.56%	-16.67%
Cash Sales / Total Sales	1.29%	+0.55%	-13.86%

Source: FICO

FICO Comment

While the February data from FICO showed early evidence of cost-of-living pressures, in March another pattern has emerged. The percentage of payments to balance has increased – albeit by a marginal 2 percent. This could suggest that some cardholders are taking a pragmatic approach to managing their card repayments so they can continue to have access to this source of funds as pressure on disposable income increases.

There are, however, clear signs of price pressures impacting finances with a 16 percent month-on-month increase in accounts that are one month in arrears. Accounts two months in arrears are also increasing, by over 6 percent month-on-month. However, the percentage of accounts with three missed payments has dropped – by over 7 percent month-on-month.

Another signal of falling consumer confidence is the small drop – less than 2 percent – in spend on cards in March 2022.

Remaining vigilant to repayment trends over the next few months will be critical for lenders to ensure vulnerable households are given the support they need.

These card performance figures are part of the data shared with subscribers of the FICO® Benchmark Reporting Service produced by FICO^® Advisors, the business consulting arm of FICO. 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 more than 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/20220531005437/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