FICO UK Credit Card Market Report: January 2024
March 25 2024 - 5:10AM
Business Wire
Consumer spending and payments followed typical
seasonal patterns for the start of the new year
According to the FICO UK Credit Card Market Report for January
2024, consumer credit behaviour followed typical start-of-year
patterns. Spending fell by 8.6% post-Christmas, while consumers
increased their payments to balance by 2.7%. Credit card providers
will, however, be encouraged by the first increase in payments to
balance since July 2023.
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Average UK credit card spend dropped by
8.6% month-on-month in January 2024, equating to an average spend
of £775, according to new figures from FICO. (Graphic: FICO)
Highlights
- Average card spend dropped by 8.6% month-on-month, equating to
an average spend of £775
- Reflecting continued high prices, year-on-year spend in January
was 2.4% higher than 2023
- Increased payments to balance led to a 0.7% drop in average
card balances, which now stands at £1,770
- Fewer cardholders missed one card payment in January compared
to December
- There was an increase in the number of cardholders who missed
two and three payments in January - 12.6% and 1.4% -
respectively
- The percentage of accounts using the cash limit decreased for
the fourth month in a row after peaking in September
Key Trend Indicators – UK Cards January 2024
Metric
Amount
Month-on-Month Change
Year-on-Year Change
Average UK Credit Card Spend
£775
-8.6%
+2.4%
Average Card Balance
£1,770
-0.7%
+7.1%
Percentage of Payments to Balance
37.6%
+2.7%
-4.6%
Accounts with One Missed Payment
1.7%
-1.2%
-0.1%
Accounts with Two Missed Payments
0.4%
+12.6%
+1%
Accounts with Three Missed Payments
0.2%
+1.4%
+4.7%
Average Credit Limit
£5,635
+0.3%
+1.1%
Average Overlimit Spend
£85
-2.3%
-5.5%
Percentage of Customers using Credit Cards
to Take Out Cash
3.3%
-3.6%
+6.2%
Source: FICO
FICO Comment
After increased activity in the lead-up to Christmas, there is
usually a drop in spending at the start of the new year; 2024 has
followed this trend. What credit card providers will now be looking
at is how well card users will manage the increased debt incurred
over the festive season and the FICO data suggests that consumers
focused on paying off credit card balances in January.
Alongside an 8.6% drop in spending, there was a 2.7% increase in
payments to balance compared to December, with 37.62% of balances
being paid in the first month of the new year. This is the first
increase in payments to balance since July 2023.
Historical FICO data shows that the percentage of payments to
balance usually drops in February; it will therefore be interesting
to see whether payments continue to trend back down to pre-COVID
levels of around 30% in the coming months.
When it comes to missed payments, the percentage of customers
missing one card payment was 1.2% lower month-on-month in January.
However, this followed the significant 14.8% increase in December.
Combined with seasonal spending, this meant that customers missing
two payments rose significantly in January: 12.6% month-on-month.
Customers missing three payments also rose, with a 1.4%
month-on-month increase and 4.7% year-on-year.
The average balance on accounts with missed payments is another
important trend lenders will want to track over the coming months
and one which currently appears to be influenced by the continued
high cost of living. The average balance of customers missing one
payment increased by 2.9% month-on-month in January, to £2,235.
This is 9.3% higher than the same period the previous year. The
average balance of two missed payments in January was 1% lower
month-on-month, but 8.4% higher than in 2023. And while there was a
0.3% drop in the average balance for customers missing three
payments, there was an 8% increase year-on-year.
The other spending pattern lenders will want to monitor closely
over the coming months is the percentage of customers using the
cash limit on their cards. This decreased for the fourth month in a
row after peaking in September.
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 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.
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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