UK Credit Cards: Stable Activity in September Ahead of Holiday Period

Following a yo-yo summer of consumer spending and credit card management, our data for September 2023 showed a more stable picture of credit card spending and card balance management. The FICO UK Credit Card Market Report for September 2023 saw the average spend on credit cards fall slightly, although it remains higher than the previous year.

With the festive season approaching and advertisers ramping up their spending push, it’s likely card spending will rise in November and December, although the question will be how much, given the other well-documented financial pressures consumers are facing.

UK Card Highlights

• Average UK credit card spend fell slightly during September, ending at £805, down 2.9% on August 2023 but up 4.1% on the previous year
• The average card balance remained relatively stable compared to August, at £1,735, but continued the longer-term upward trend with a year-on-year increase of 8.6%
• After peaking at 42% in May 2022, the percentage of payments to balance has been on a downward trend and currently stands at 38% — this follows up-and-down movements since a two-year low in April 2023
• Year on year, the percentage of customers missing one, two and three card payments has continued to rise, with those missing two payments 9.3% higher than in 2022 and those missing three payments 17.8%
• The use of cash for transactions has also continued the upward trend since March 2023 — in September there was a 1.6% month-on-month increase and a 4.3% increase year-on-year

Driven by the small increase in spending, there has been a slight monthly increase in average credit card balances. There has also been an increase in the number of customers missing card payments, illustrating that the ongoing economic volatility continues to impact consumer transactions and overall spending. Inflationary pressures and a weak economic outlook mean average balances are likely to continue an upward trend, remaining higher than last year for some months to come.

The month-on-month picture for missed credit card payments is still volatile. There was a decrease in missed payments in August, but September brought a 13.5% increase in accounts missing one payment. The number of accounts missing two payments remained relatively stable in September, continuing a new flat trend we have seen since July 2023, following steady increases from May 2022.

For those customers missing two payments, the average balance has marginally decreased by 0.6% month-on-month at £2,605, but this has been trending upwards over the last few months.

The continuing economic turbulence, high cost of goods and energy bills as well as the approaching festive season are set to sustain pressure on consumer finances. The steady increase in customers using their credit cards to withdraw cash that we have witnessed since March this year continued in September, with a month-on-month increase of 1.6% and an annual increase of 4.3%. This trend is another signal of financial struggle and should act as an important warning sign to lenders.

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.

How FICO Can Help You Manage Credit Card Risk and Performance

• Explore our solutions for customer management
• See my post on UK Credit Card Trends: From 2008 Crash to Cost-of-Living Crisis
• Read more posts on UK cards