FICO Data: More Transactors Than Revolvers Among UK and Irish Cardholders

With customer behavior changing as the UK economic recovery builds, how are cardholders paying off their balances? Our latest research suggests little change in this pattern, with fewer than 50% of cardholders overall classed as revolvers vs. transactors.

Our Global Business Consulting team reviewed more than 11 million active card accounts, and checked the percentage of accounts that are revolving balances and paying interest. They then broke this down by vintage: New (0 to 12 months on books), Established (1 to 5 years) and Veteran (5+ years). 

Key findings:

• About 57% of all card accounts are paid in full each month.
• Overall, the percentage of accounts paying interest fell 2.4% year on year. 
• The Established vintage consistently generates the highest percentage of interest payers, despite a slight decrease to 51% in the year studied. 
• The percentage of revolvers in the New and Veteran segments increased, most noticeably for New accounts by 3.4%. The growth is marginal, due to the low values involved. The low percentage may be due to the increase in low-rate balance transfers, which is causing the increase in activity rates at this level. 

Card issuers face a challenge in attempting to convert transactors into revolvers. Some issuers are tackling this by including profitability factors into their pricing and limit increase making, rather than the traditional risk measures. This can also be extended to the decision whether to reissue new cards on expiry to transactors and low-interchange generators, although delivering this message to customers can be complex. Issuers can also consider using profitability models in the application process to improve the likelihood of limits being used and/or interest paid.