Card spending figures show that financial confidence remains strong

13th October 2021

Latest card spending figures from global analytics software provider FICO has indicated that the summer holidays and continued reliance on pandemic savings probably contributed to a growth in average spending on cards.

The analysis shows that the average spend on credit cards increased £23 to £711 in August 2021. This is the highest level since FICO started compiling the data eight years ago. For the third consecutive month, pre-pandemic levels were exceeded, up £40 on August 2019.

The change in consumer behaviour over the last 12 months is also illustrated in a 25 percent increase since January 2021 in average sales on credit cards. Pandemic savings are still underpinning this spending, as the percentage of payments to balance is 28 percent higher than August 2020, and 24 percent above pre-pandemic levels in August 2019.

August also saw consumers move from paying less than the amount due (over a two-year low) to paying the amount due and full balance (over a two-year high). However, uncertainly remains as to how long the extra savings will prop up the payment rates.

A less rosy picture is evident when examining the missed payments data. While August saw the percentage of accounts missing payments fall 4.5 percent month on month and their associated balance as a percentage of total balance drop by 5.1 percent, consumers missing two payments saw their average balance increase £27. This is 12 percent or £265 higher than August 2019.

And the longer the missed payments, the bigger the accumulated debt. Average balances on those missing three payments compared to two years ago are 19 percent or £451 higher, and for those missing four + payments are 16 percent or £429 higher.

The percentage of accounts going over their limit increased, perhaps in line with the rise in spend, but is still 54 percent lower than August 2019. The average amount being spent above limit fell a further £5 in the month but is 15 percent higher than two years ago.

Cash use on cards is an important indicator of financial stress. August saw further month-on-month growth in consumers using cash on their credit cards at 6.5 percent. Cash as a percentage of total spend also increased compared to July 2021, although it is 9 percent lower than a year ago and 41 percent lower than August 2019. And whilst it is not anticipated that cash spend on credit cards will reach levels seen prior to the pandemic, data later in the year will show whether the contactless limit increase from £45 to £100 makes any difference to cash usage.