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FICO UK Credit Market Report July 2021: Pandemic Savings Mask Picture of Debt

Increased signs of financial pressure as government support reduces and spending opportunities increase, even though percentage of payments to balance maintains upward trend

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Surveys & Market Data

LONDON, 16 September 2021


  • The percentage of accounts missing payments in July increased 3 percent year on year
  • Cash usage on cards – often a sign of financial stress - continues to slowly increase, up 4.2 percent
  • Card spend falls £3 compared to June 2021 but is second month that is higher than pre-pandemic levels
  • Percentage of payments to balance continues to grow – 5.7 percent – reaching over a two-year high

Global analytics software provider FICO today released its analysis of UK card trends for July 2021, which reveals that there was an uplift in missed payment rates, whilst spend on cards marginally fell. There was also growth in cash usage.    

It was the first full month of all retail and hospitality sectors being open; the school summer holidays started and the government furlough contribution reduced from 80 percent to 70 percent. All of these factors are likely to have contributed to consumer spending and repayment behaviours.

Missed payment rates see month of growth

The percentage of accounts missing payments in July increased by 3.2 percent. Their associated balance as a percentage of total balance also increased by 3 percent, perhaps a reflection of the reduction in furlough support and business loans repayment starting. Unsustainable post-lockdown spend could also be contributing.

The increase in the percentage of accounts and their balance missing one payment in May has resulted in an uplift in accounts missing three consecutive payments in July — up 19 percent. July also saw:

  • A 7 percent increase in the percentage of card holders missing one payment
  • Increase in average balances on accounts missing one or two payments also increased in July.
  • Balances for card holders missing two payments are £215 or 9.5 percent higher than July 2019.

Average Delinquent Balances UK Credit Cards

However, there is also a trend amongst those consumers who are able to make payments, to increase the percentage of payment to total balance. In July it increased 5.7 percent compared to the previous month, to yet another over two-year high and it is 22 percent above pre-pandemic levels in July 2019. This suggests that the extra lockdown savings continue to influence payment trends, along with the final three months of furlough support and lower average card balances.

Average Balance and % Payments to Balance UK Credit Cards

The percentage of accounts paying the full balance remains stable, at an over two-year high, and is 16 percent above July 2019’s result. Consumers shifted from paying the minimum amount in July to less than and more than the minimum; the majority moving to the former, which is reflected in the higher missed payment rates. And the percentage of consumers being charged interest increased in July, a common link with rising missed payment accounts, although it is 14 percent below pre-pandemic levels and the average amount charged is 22 percent lower.

The coming months will show if there is a trend emerging and more consumers who were able to maintain minimum payments are facing further financial struggles. Lenders will need to continue to monitor these payment trend changes, focussing on reducing payment percentages to balance, especially if balances are being maintained or, more worryingly, increasing.

Cash usage continues to slowly grow

The percentage of consumers using cash on their credit cards also continues to grow – in July by 4.2 per cent. Consumers moving to using cash, with little or no previous cash usage, could be showing signs of financial issues. But it is still well below pre-pandemic levels and with the contactless limit increasing mid-October from £45 to £100, cash usage may not return to the higher levels seen pre-COVID19.

Looking Ahead

Lenders will need to be vigilant and analyse their data and results rapidly, in the changing economic conditions during the remainder of 2021 and into 2022. The full scale of the debt issues should become clear over this period too, so focus will be on the impact on collections as well as preparation for strategic approaches post COVID as issuers decide what their ‘new normal’ is.

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 percent of UK card issuers. Issuers wishing to subscribe to this service can contact staceywest@fico.com.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956 and based in Silicon Valley, 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, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 120 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time.

Learn more at https://www.fico.com

FICO and TRIAD are registered trademarks of Fair Isaac Corporation in the U.S. and other countries.

For further comment on the FICO UK Credit Card activity contact: 
Wendy Harrison/Parm Heer/Matthew Enderby 
0208 977 9132  

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