FICO UK Credit Market Report February 2021: A Tale of Two Halves
The financially stressed show signs of more stress while lockdown has helped others
LONDON, April 15, 2021 /PRNewswire/ --
Highlights
- The average amount spent over the card limit 30 percent higher than February 2020
- Percentage of payments to balance fell by 8 percent in February
- Average balances on accounts missing payments continues to increase
Global analytics software provider FICO today released its analysis of UK card trends for February 2021 with increased financial stress and reduced spending painting a conflicting picture of UK consumer finances.
"Those able to save have put more aside but those suffering from financial stress have seen no change in the circumstances contributing to their situation," explained Stacey West, principal consultant for FICO® Advisors. Consequently, FICO has seen a continuing increase in the average amount consumers are spending over their credit card limit."
Percentage of payments to balance falls
What will ring alarm bells for card issuers is that the percentage of payments to balance fell by 8 percent in February and is now only 2 percent above February 2020. This is despite average card balances falling £33 or 2 percent and reaching another over a two-year low.
The average balances on accounts missing one, two or four-plus payments increased, although at a lower rate than they did in February 2020. Average balances on accounts missing two payments are £217 or 9 percent higher than a year ago. This has been driven by accounts more than one year old as those under a year old saw a second consecutive fall. Three missed payment average balances are £493 higher year on year and four missed payments plus are £372 up, an over two-year high.
Card limits remain stable, but the average amount over-limit continues increasing
The percentage of accounts going over their limit fell to another over two-year low and is now 53 percent less than it was in February 2020. However, for those who are exceeding their limit, this has increased once more, reaching yet another over two-year high at 30 percent higher than a year ago.
"The furlough extension will give issuers more time to interact with their customers to better gauge how many might lose their only source of income later in the year," concluded Stacey West. "Anyone struggling or knowing they soon will be should contact their bank or card issuers to discuss their situation. Digital transformation programmes have been accelerated due to the pandemic with many now offering multiple means of communication for customers to choose the one they feel most comfortable with."
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.
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