FICO UK Credit Market Report August 2021: One Month from End of Furloughs, Financial Confidence Remains Strong
August saw a two-year low in consumers paying less than the amount due on cards, although signs of financial pressure can be seen in an increase in the average balance for accounts that have two missed payments and another rise in the use of cash on cards
LONDON, Oct. 12, 2021 /PRNewswire/ -- Global analytics software provider FICO today released its analysis of UK card trends for August 2021. The summer holidays and a continued reliance on pandemic savings probably contributed to a growth in average spend on cards. But the signs of financial pressure are also evident with an increase in average balances on accounts with missed payments and growth in card usage on cards – another sign of financial stress.
Eight-year high for increasing spend on UK cards
The average spend on UK credit cards increased £23 to £711 in August 2021. This is the highest level since FICO started compiling the data eight years ago. For the third consecutive month pre-pandemic levels were exceeded, up £40 on August 2019.
The change in consumer behaviour over the last 12 months is also illustrated in a 25 percent increase since January 2021 in average sales on credit cards.
And it seems that pandemic savings are still underpinning this spending, as the percentage of payments to balance is 28 percent higher than August 2020, and 24 percent above pre-pandemic levels in August 2019.
Missed payment rates see month of growth
A less rosy picture is evident when examining the missed payments data. While August saw the percentage of accounts missing payments fall 4.5 percent month on month and their associated balance as a percentage of total balance drop by 5.1 percent, consumers missing two payments saw their average balance increase £27. This is 12 percent or £265 higher than August 2019.
And the longer the missed payments, the bigger the accumulated debt. Average balances on those missing three payments compared to two years ago are 19 percent or £451 higher, and for those missing four + payments are 16 percent or £429 higher.
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 percent of UK card issuers. Issuers wishing to subscribe to this service can contact staceywest@fico.com.
About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. Learn more at https://www.fico.com
FICO and TRIAD are registered trademarks of Fair Isaac Corporation in the U.S. and other countries.
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