FICO UK Credit Market Report September 2021: Calm Before the Storm or Will Lockdown Stashes Save the Day?
Financial prudence appears to be the current theme for UK cardholders, with spending down and percentage of payments to balance up – but will this positive attitude remain as COVID savings dwindle?
LONDON, Nov. 16, 2021 /PRNewswire/ -- Global analytics software provider FICO today released its analysis of UK card trends for September 2021 and the contrasting conditions that have been seen throughout 2021 continue. The month saw average spend fall, growth in payment levels and falling missed payment rates, all suggesting a current state of strong financial prudence.
UK Card average spend falls for third time in 2021
The average spend on UK credit cards in September 2021 decreased £3 to £708. However, it was still £49 on September 2019, suggesting that consumers are still relying on lockdown savings.
An eight-year high in percentage of payments to balance
Another indicator of the continuing role of pandemic savings is the eight-year high in the percentage of payments to balance. Year on year it is 22 percent higher and 26 percent above 2019 levels.
While average card balances grew £1 in September 2021, they remain 4 percent lower than a year ago and 11 percent below pre-pandemic levels (in September 2019).
Missed payment rates fall to new over two-year lows
The percentage of accounts missing payments fell 2.2 percent in September 2021. Their associated balance as a percentage of total balance decreased 2 percent, indicating the power of the savings and perhaps consumer restraint with an uncertain few months ahead.
The percentage of accounts missing payments is 30 percent lower than two years ago, and the percent of total balance is 17 percent below.
Compared to September 2019:
- Average balances for cardholders with two missed payments are 7 percent or £150 higher.
- Average balances for cardholders with three missed payments are 16 percent or £404 higher
- Average balances for cardholders with four or more missed payments are 15 percent or £406 higher.
This indicates that although a lower proportion of consumers are missing payments, those that do have higher average balances.
Spend over card limit stabilises
The percentage of accounts going over their limit stabilised, perhaps due to the drop in average spend, and remains 54 percent below September 2019 levels.
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.
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