Our analysis of UK credit cards shows that the average cardholder had 32.46% of unused exposure in February 2014, compared to 33.38% at the same time the previous year. This slight decrease puts unused exposure at around £41 billion.
This slight change masks a larger fall since 2008, when the average unused exposure was 38.89%. This fall can be attributed to the limit decrease campaigns on never-active accounts, long-term inactives and accounts with low utilization.
The new numbers show there is scope for issuers to decrease limits further, in order to gain further benefit from a reduction in capital requirements. More targeted initial limit allocation could also influence this. Ongoing offers should be based on data indicating the likelihood of take-up on any extra credit, as well as risk and profit metrics. The new FCA regulations will help to ensure any line increase offers take affordability into consideration and decreases will manage the existing limits.
FICO’s consultants also looked at the new data by vintage. Perhaps surprisingly, it is...
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