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FICO UK Credit Card Market Report: March 2025

1. UK credit card spending dropped 6.8% month-on-month in March 2025. 2. Average credit card balances rose 4.9% year-on-year amid financial pressures. 3. 23% increase in missed payments signals rising concern for lenders. 4. Established customers missed higher payments, indicating growing financial strain. 5. Overall balances are increasing despite a decrease in spend and payments.

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Why Bearish?

The significant rise in missed payments and declining consumer spending may reduce lender profitability. Similar historical trends in rising defaults have often led to stock price declines for financial companies.

How important is it?

The article highlights trends directly affecting credit risk assessments, core to FICO's business. Increased missed payments may prompt lenders to re-evaluate FICO's services.

Why Short Term?

Immediate market reactions are likely due to recent data on missed payments. As banks assess risk, short-term profitability may come under pressure, impacting FICO's stock.

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-Financial pressures hitting UK households evident in drop in spend, whilst balances increase year-on-year LONDON--(BUSINESS WIRE)--While the months after Christmas typically see spend on credit cards fall, the new data from global analytics software leader FICO for March 2025 underlines the financial pressures impacting UK households.The trend in missed payments will be a concern for lenders, in particular the sharp increase of 23% month-on-month for one missed payment.Share Following seasonal patterns, average spend was 6.8% lower than February and 3.7% down compared to March 2024. However, payments to balance also fell in March, by 1.6% month-on-month and 5.8% year-on-year, resulting in higher average balances compared to 2024. Established customers who have had their cards between one and five years, and who have missed one payment, saw the largest drop in payments to balance, which will be a concern to lenders. Highlights Average credit card spending fell 6.8% month-on-month and 3.7% year-on-year Average balances rose by 4.9% year-on-year The number of customers missing one payment rose by almost a quarter (23%) compared to February 2025 The average balance of one missed payment is 5.6% higher year-on-year Average balances for customers with one, two or three missed payments are higher than the same period in 2024 The percentage of customers using credit cards for cash fell for the sixth month in a row and now stands at 2.9%, a 2.1% monthly decrease and an 8.7% annual decrease Key Trend Indicators – UK Cards March 2025 FICO Comment: With spend having decreased by 6.8% month-on-month and 3.7% year-on-year, average spend now stands at its lowest point for two years at £735. However, higher living costs have contributed to higher balances, which have increased 4.9% compared to March 2024, now standing at an average of £1,845. The trend in missed payments will be a concern for lenders, in particular the sharp increase of 23% month-on-month for one missed payment. The average balance decreased 1% month-on-month to £2,320 but is still 5.6% higher year-on-year and is trending upwards. The percentage of customers missing two payments dropped 0.2% month-on-month and 3.8% year-on-year, while customers missing three payments has been increasing since October 2024. The average balance of two missed payments is also trending upwards. With an average of £2,875, it is 2.5% higher than February and 6.4% higher than March 2024. The average balance of three missed payments is also trending up, by 0.9% on the previous month and by 6.6% on the previous year equating to an average of £3,220. Although the average delinquent balances are trending upwards, so is the overall balance. When comparing the delinquent balance to the overall balance, the increase in balances for one missed payment is comparable. However, since January 2025, the increase in balances for customers with two or three missed payments balances has increased at a higher rate. Lenders should, therefore, review balance and risk score breaks within collections strategies, ensuring customers with higher balances at risk are prioritised and receive flexible and tailored treatment. Particular focus should be given to customers who have had their cards between one and five years, especially for those who are coming off promotional offers and who may now be struggling to pay off higher APRs. 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. About FICO FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, 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, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 80 countries do everything from protecting 4 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by 90% of top US lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency. Learn more at www.fico.com. FICO and TRIAD are registered trademarks of Fair Isaac Corporation in the United States and other countries. More News From FICO

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