December 2020 data on UK credit cards reveals rapidly increasing balances for consumers missing two or more payments

Highlights

  • Average spend on UK credit cards continued to increase in December but is
  • 4.9 percent or £63 lower than December 2019
  • Average balances on accounts missing two or more payments continue to increase
  • Payments as percentage of balance started to increase again

Global analytics software provider FICO today released its analysis of UK card trends for December 2020, which presents a mixed picture of UK consumer financial stability. Some of the data suggests that credit card users are managing their finances prudently, but where there is already pressure on finances, the reliance on credit cards is increasing.

For more information: https://www.fico.com/blogs/uk-credit-market-report-december-2020-debt-pressures-growing

The inevitable Christmas spending increased, albeit at lower levels than in 2019. But rising balances for accounts missing two or more payments are ringing alarm bells.

Spend on UK cards and percentage of payments increased

Not surprisingly, average spending on UK credit cards increased in December – by £25 to £663. It is, however, 4.9 percent lower than in December 2019. But there is still uncertainly about how much furlough payments and payment holidays gave some consumers the confidence to spend more than they can afford to repay.

“Average credit card spend normally falls in January and it is anticipated this year will be no different,” said West. “We just have to see how much the current conditions will impact that downward trend.”

A mixed picture

Reflecting the mixed picture of consumer finances, the percentage of payments to balance started to increase again in December, reaching over a two-year high, although it is still 9.5 percent lower than December 2019.  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.

Source:  FICO Press Release