FICO credit card market report: December 2022
Clear evidence of the impact of inflation on household spending is revealed in FICO’s latest report of UK card trends, for December 2022. While retail sales volumes were widely reported as being down in the last month of the year, the FICO data shows the highest average total credit card spending since its UK Risk Benchmarking records began in 2006. Underlining the financial pressures being faced, December also saw a significant rise in cardholders missing one credit card payment, which will be a particular concern to lenders.
Highlights
- Average total sales up 9% over November 2022 at £825
- Average balances rise by 5% month-on-month to £1,660
- Accounts missing one payment jumped month-on-month by 19%
- Percentage of accounts with two missed payments was 19% higher than December 2021 and 20% higher for three missed payments
- The pattern of falling payments to balance also continued in December 2022 with a 2% month-on-month drop and a 4% year-on-year decrease
FICO comment
Analysis of the largest consortium of UK cards data shows a convergence of rising prices and dwindling disposable income in December 2022. With average total spend at its highest and late payments rising significantly month-on-month and year-on-year, financial institutions will be particularly concerned as the focus on Consumer Duty heightens.
The Financial Conduct Authority’s (FCA) Consumer Duty rules, which will apply to new and existing products or services that are open to sale or renewal and come into force on 31 July 2023, require firms to act to deliver good outcomes for customers. They must be able to access products and services that meet their needs and offer fair value, as well as receive the support they need, when they need it. This includes financial institutions offering vulnerable customers other products with more suitable pricing etc.
As financial institutions face increasing numbers of late payments they will benefit from using optimised strategies to determine who and when to contact, and omnichannel communications to ensure those messages land. Those with the ability to incorporate digital-first communications will be in a much stronger position to deploy effective collections strategies.
Key Trend Indicators – UK Cards December 2022
The Data Charts
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.
