UK Holiday Card Spend Rose 10 Percent in 2012, FICO Data Reveals

LONDON — February 18, 2013 — FICO (NYSE:FICO), the leading provider of analytics and decision management technology, today released its quarterly UK cards data showing that average total sales per “classic” credit card hit a two-year high in December of £600.25, surpassing the level from December 2011 by 10 percent. The latest data from the FICO^® Benchmark Reporting Service showed that average sales per Irish (Euro) card also rose, hitting a two-year high of €732.55, while student cards were slightly above 2011 levels. Only premium cards fell in terms of spending compared to December 2011.

“The growth in card spending far outstripped the growth in December retail sales compared to last year, which the government puts at 1.8 percent, excluding fuel,” said Nigel Brayne, senior director of Global Business Consulting at FICO. “This suggests that many consumers shifted their spending to credit cards, perhaps so that they could pay for gifts over a longer period of time. Just as consumers are worried about their finances, card issuers will be monitoring their accounts closely for signs of delinquency.”

For accounts on the books less than 12 months, FICO’s data also showed a drop of 22 percent in the percentage of payments to balance, compared with December 2011. For these accounts, average total sales were up 4 percent over last year and utilization was up 5 percent.

“We recommend card issuers review the credit quality of their newly booked accounts,” said Brayne. “By reviewing application score cut-offs and criteria, they can see whether they’re booking a riskier population. They may also want to bring additional data into their origination decisions. If the credit quality has dropped, it’s a good idea to review their initial line allocations, as our data shows these also rose since 2011.”

Payment trends were still positive in the most recent data, with the percentage of balances that were two cycles (60 days) delinquent hitting a two-year low. “It will be interesting to see the impact of the Christmas spend on delinquencies next quarter, to see whether cardholders overreached in their spending,” Brayne said.

The card performance figures are part of the data shared with subscribers of the FICO^® Benchmark Reporting Service, which compares overall market performance in the UK cards market with individual card issuers’ performance. The data sample studied represents 26 million accounts, or about half of all credit cards issued in the UK, and comes from client reports generated by the FICO^® TRIAD^® Customer Manager solution in use by most UK card issuers.

Card issuers that subscribe to the FICO^® Benchmark Reporting Service receive a quarterly review of their portfolio compared to the industry, with 24 months’ worth of data. For greater insight, subscribers can explore the data by vintage of accounts. For information on the FICO Benchmark Reporting Service, contact Stacey West at staceywest@fico.com.

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