FICO UK Credit Card Market Report: October 2024

Payments to balance unexpectedly increase – albeit marginally – as spend and balances fall in typical seasonal patterns

Following expected seasonal trends between summer and Christmas, October 2024 saw sales and credit card balances drop, month-on-month according to data from global analytics software leader FICO. However, the high cost of living that has been a feature of 2024 means spending remained 1% higher than the same period in 2023.

In contrast, the percentage of balance paid went against the usual trend of dropping from August until the end of the year, with marginal month-on-month increases seen in September and October. In September, there was a 1.3% increase, while October showed a 0.3% increase, taking the percentage of balance paid to 37.2%. However, again reflecting the financial pressure on households in 2024, both months are lower than the previous year, by 2.5% and 1.5% respectively.

Highlights

• Sales dropped 5.5% month on month to an average of £790 in October but have increased by 1% on the previous year
• After a 0.5% increase in September, average balances experienced the usual pre-Christmas drop – down 0.9% to an average of £1,815 in October
• Bucking the usual annual trend, there were marginal increases in the percentage of balance paid in September and October
• The pattern of late payments has also stabilised year-on-year, with an increase only in the percentage of cardholders missing three payments compared to October 2023
• The percentage of customers using cash on credit cards dropped in October to 3.45%, having peaked in September at 3.54%

FICO Comment

Compared to all vintages of credit card holders, veteran customers (who have had their credit card for five years or more) have the highest delinquent balances for those missing two or three payments. This group also has the highest average credit limit. Whilst it is expected that this group of customers may have higher credit limits as they have had their cards for longer and will probably have been offered limit increases at some point, their average active balance is lower than for the new or established groups of card holders.

Given the continued financial pressures affecting households, risk managers should review both limit management and collections contact strategies, with a particular focus on the veteran customer group. These customers may be missing payments for the first time and may need more tailored support.

For habitual late payers, they may have become accustomed to the same collections contact methods each time they miss payments. Shuffling when treatment is actioned for these customers, and incorporating different communications channels by adding in rules looking at ‘number of times missed one / two / three payments last 12 months’, could help improve collection performance on higher balances.

Key Trend Indicators – UK Cards October 2024

Metric

Amount

Month-on-Month Change

Year-on-Year Change

Average UK Credit Card Spend

£790

-5.5%

+1%

Average Card Balance

£1,815

-0.9%

+5.2%

Percentage of Payments to Balance

37.17%

+0.3%

-1.5%

Accounts with One Missed Payment

1.46%

+3.8%

-8.6%

Accounts with Two Missed Payments

0.32%

+0.3%

-4.9%

Accounts with Three Missed Payments

0.2%

-3.1%

0.3%

Average Credit Limit

£5,765

+0.2%

+2.8%

Average Overlimit Spend

£90

+4.6%

+1.1%

Cash Sales as a % of Total Sales

0.87%

-3.7%

-7.6%

Source: FICO

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% of UK card issuers. For more information on these trends, contact FICO.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 80 countries do everything from protecting 4 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by 90% of top US lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency. Learn more at www.fico.com.

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