FICO UK Credit Market Report March 2021: Early Warning Signs

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FICO

12 May, 2021, 08:00 GMT

True state of consumer finances still masked in March; April will be pivotal for lenders

LONDON, May 12, 2021 /PRNewswire/ --

Highlights:

  • Average spend on UK credit cards 9 percent lower than March 2020
  • Average amount spent over the card limit continues to increase to another over two-year high - 25 percent higher than March 2020
  • The percentage of payments to balance fell a further 4 percent
  • Average balances on accounts missing two or more payments higher than a year ago
  • Cash usage continues to fall – now 60 percent lower year on year

Global analytics software provider FICO today released its analysis of UK card trends for March 2021, which shows a big change in spending and financial management in the last 12 months.

More information: https://www.fico.com/blogs/uk-credit-market-report-march-2021-early-warning-signs 

"Our March data shows the impact of what is hopefully the last full month of a national lockdown with fewer accounts exceeding their limit, falling card and cash usage and low missed payment rates," explained Steve Hadaway, who oversees FICO's operations in EMEA. "But we may be starting to see a deterioration in affordability, with a lower percentage of payments to balance and slowly increasing volumes of accounts with missed payments. With the lockdowns ending and the opportunities to spend increasing, April will be a pivotal month in starting to reveal the true state of consumer finances."

Spend on UK cards increased with the percentage of payments falling
The average spend on UK credit cards increased by £13 to £560 in March 2021, with sales 9 percent lower than a year ago. And there was a shift in consumers paying greater than the amount due on their cards to paying the amount due or less.

Missed payment rates remain low but they are increasing
Average balances on accounts missing two or more payments remain higher than a year ago. For accounts missing two payments, average balances are £103 or 4 percent higher than March 2020.  Average balances on accounts with three missed payments are £414 higher (16 percent) and four missed payments plus are £349 higher (12 percent), reaching another over two-year high.

Card limits remain steady, but the average amount over-limit reached another over  two-year high
The percentage of accounts going over their limit is now 53 percent lower than March 2020 and reached another over two-year low. However, for those who have spent above their limit, the average amount over the limit is 25 percent higher than a year ago.

These card performance figures are part of the data shared with subscribers of the FICO® Benchmark Reporting Service. The data comes from client reports generated by the FICO® TRIAD® Customer Manager solution in use by some 80 percent of UK card issuers.

Ends

FICO and TRIAD are registered trademarks of Fair Isaac Corporation in the U.S. and other countries.

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