FICO UK Credit Card Market Report April 2022

LONDON–(BUSINESS WIRE)–FICO’s report of April 2022 UK card trends shows some early signs of the impact of the widely reported cost-of-living pressures. The monthly report based on the largest consortium of UK cards data shows a typical rise in card spend and balances, but also a slight increase in missed payments. Average monthly spend hit £760, tied with December 2021 as the highest in more than two years.

Highlights

  • Average total sales at £760 – a 10 percent month on month increase, which is typical behavior in card spend for the time of year

  • Average active balance is also rising month on month – again typical for the time of year

  • No change month on month in percentage of payments to balance, suggesting continued pragmatic management of credit card accounts

  • But a small uplift in the average balance for accounts missing 1 payment suggests inflation is having an impact

Key Trend Indicators – UK Cards April 2022

metric

Amount

Month-on-Month

Change

Year-on-Year

Change

Average UK Credit Card Spend

£760

+10%

+22%

Average Card Balance

£1,554

+2.3%

+5.3%

Percentage of Payments to Balance

40%

0.00%

+22.5%

Accounts with One Missed Payment

1.4%

-17.6%

+2.1%

Accounts with Two Missed Payments

0.3%

+0.8%

-6.9%

Accounts with Three Missed Payments

0.2%

+1.6%

-13.4%

Average Credit Limit

£5,490

+0.2%

+2.6%

Average Overlimit Spend

£120

-7.7%

-17.8%

Cash Sales / Total Sales

1.2%

-5.6%

-11.8%

Source: FICO

FICO Comment

Much of the April data suggests that credit card behavior is following typical patterns, exhibiting typical post-Christmas spending and repayment trends. The percentage of repayments to balance is flat month on month, suggesting continued financial prudence.

The signs of the cost-of-living crisis are still limited, with the biggest area of ​​concern being a 3 percent increase in the average 1 payment missed balance month over month for new cardholders (less than 12 months). Typically, the higher-risk accounts are more credit hungry, so lenders will want to be vigilant in monitoring this trend.

FICO believes that inflationary impacts will be worst for those already identified as in persistent debt or potentially new candidates for that designation. Populations most vulnerable to inflation include those living on fixed incomes, as well as lower-income households without savings in reserve, especially where wages are increasing more slowly than the cost of living. Lenders are encouraged to perform 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 in inflation’s grip.

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

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