FICO Reveals Missing Card Payments Have Increased by 20% Since Last Year

November 1, 2023

Since January 2020, FICO’s latest report, titled UK Credit Card Market Report for July/August 2023, gives us insight into consumer behavior and how it could affect how lenders will respond in the coming months, and how they will “look after vulnerable customers.”

Average credit card balance is at its highest point since 2006, when FICO records started, and it is shown that the average balances have continued to increase  monthly, reflecting the worrying state of the UK economy and its rising inflation.

The FICO analysis also illustrates the delicate balancing act cardholders are managing, with the percentage of payments to balance yo-yoing over the last few months following a significant drop in the spring. This can be expected to continue whilst households struggle with the combined burden of higher prices and higher credit card balances.

On average, consumers spent only £5 more in August (£825) than they did in July (£839) which is not a big increase, however it is still much higher than last year at £790 and £810 respectively. 

These aren’t the only numbers that have continued to rise; the quantity of consumers missing payments has also increased compared to the same period in 2022. According to The Fintech Times, this “reflects the challenges faced by those without a savings cushion to fall back on.”

In addition to these continually rising credit card balances, the number of consumers who are not able to keep up with their payments have also increased since last year. Comparing 2022 and 2023, customers who missed two payments increased by %11.9 and those who missed three payments increased %22.03.

The first missed payments were documented during 2022’s Christmas period, and have only increased since.

In particular, the average missed payment balance has been increasing since May 2023 for those customers missing one payment and since March 2023 for those with two missed payments.

Another worrying number for lenders is the increase of cash withdrawals with credit cards, as the usage of cash has increased for the first time in a decade according to UK Finance, which was also recorded in the FICO figures.

In fact, ever since March 2023, this figure has seen an increase in July of 3.6% and 4% in August. For comparison, pre-COVID, cash withdrawal with a credit card was at 6%.

All of these figures are important to keep in mind, and they are expected to increase in the coming months, as lenders need to  prepare for winter fuel costs eating into consumers’ “disposable” income, and subsequent inflation numbers which are only set to continue rising.

Want to learn more? Check out The Fintech Times’ full write-up here.

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