FICO UK Credit Card Market Report: May 2024
25 July 2024 - 6:00PM
Business Wire
Spending and balances follow usual patterns
although signs of financial stress seen in 8.4% increase in
cardholders missing one payment and 2.3% rise in cash withdrawals
on credit cards
The FICO UK Credit Card Market Report for May 2024 shows
consumers following the usual annual patterns for spending and
managing their credit card balances. Typical of late Spring, the
percentage of balances paid rose in May, leading to lower average
outstanding balances. Spending also fell. However, if consumers
continue to follow seasonal trends, spend is likely to rise in the
summer months, potentially leading to fewer balances being fully
paid.
Highlights
- Credit card spending fell 2.9% from April to May 2024, now
standing at an average of £805, however it was still 0.6% higher
than May 2023
- In line with lower spending, average balances were 0.3% lower
in May than April, but 6.3% higher than May 2023
- After falling from March to April, the number of cardholders
who missed one payment increased by 8.4% from April to May
2024
- The average balance for cardholders missing one payment has
remained higher year-on-year for two years, currently standing at
£2,225
- The number of consumers withdrawing cash on their credit cards
rose by 2.2% month-on-month, to 3.3% in May, another indicator of
potential financial stress
FICO Comment
Although inflation remained high, spending fell from April to
May. However, as the Summer holiday season approaches, spending is
expected to follow the usual pattern and increase over the coming
months. As spending increases, it is likely that payments to
balance will fall, leading to higher average balances and requiring
further vigilance from lenders.
Missed payments remain a particular area of interest for
lenders, increasing by 8.4% in May, after a drop in April. Overall,
this figure has been trending upwards since August 2022.
Some 1.6% of cardholders missed one payment in May, a 2.5%
year-on-year increase. Some 0.3% missed two payments, which was a
6.5% increase on May 2023. However, 8.1% fewer cardholders missed
two payments than in April, which was to be expected following a
drop in those missing one payment in April and therefore not
rolling forwards in delinquency.
The percentage of cardholders missing three payments continues
to trend up, having increased for three consecutive months. In May
2024, there was a 4.1% increase on the previous month, to 0.2%,
which represents a significant year-on-year increase of 13.1%.
With missed payments rising, the average missed payment balances
for one, two and three month levels remain higher year-on-year. For
cardholders who have missed one payment, the average balance has
now been higher year-on-year for more than two years, currently
standing at £2,225. The average balance for customers missing two
or three payments has been higher year-on-year since August 2023,
standing at £2,685 and £3,030 respectively. These rises may be due
in part to inflation.
The other indicator of financial stress is cash withdrawals on
credit cards. Since March, cardholders have been increasingly
withdrawing cash on their credit cards, with 3.3% of customers
doing so in May 2024, a 2.2% month-on-month increase. However, the
rate does remain 2.6% lower than May 2023.
Key Trend Indicators – UK Cards May 2024
Metric
Amount
Month-on-Month
Change
Year-on-Year Change
Average UK Credit Card Spend
£805
-2.9%
+0.6%
Average Card Balance
£1,780
-0.3%
+6.3%
Percentage of Payments to Balance
37.79%
+4.3%
-4.2%
Accounts with One Missed Payment
1.6%
+8.4%
+2.5%
Accounts with Two Missed Payments
0.3%
-8.1%
+6.5%
Accounts with Three Missed Payments
0.2%
+4.1%
+13.1%
Average Credit Limit
£5,690
+0.4%
+2.2%
Average Overlimit Spend
£90
+3.5%
-4.3%
Cash Sales as a % of Total Sales
0.89%
+2.2%
-2.6%
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% of UK card
issuers. For more information on these trends, contact FICO.
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, insurance, telecommunications, health care, retail and
many other industries. Using FICO solutions, businesses in more
than 100 countries do everything from protecting 4 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.
FICO and TRIAD are registered trademarks of Fair Isaac
Corporation in the U.S. and other countries.
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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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