While the months after Christmas typically see spending on credit cards fall, new data from analytics firm FICO shows clear financial pressures are impacting UK households.
The group’s latest data (which includes transactions until the end of Q1 2025) shows 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, the group said.
People are spending less but owing more
With spending 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,” FICO said.
“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, the firm said.
“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,” it said.
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