Customers missing one credit card payment increases by 8.3%

Latest to research from FICO has found that the number of customers missing one payment increased by 8.3 percent compared to August and 9.1 percent year on year.

The research also found that average total sales were £775, 4.56 per cent lower than August. The average active balance also dropped in September to £1,595 – 1.14 per cent lower than August and reversing the upward trend seen over the previous 18 months

Accounts with two missed payments increased marginally month on month — by 0.6 per cent — but those missing three payments increased by 3.7 per cent compared to August

FICO says that the percentage of cardholders missing one payment is also rising, although, overall, the average balance for customers missing two payments is trending downwards. This suggests that lenders have already taken targeted activity earlier in the year to help customers who have missed one payment to avoid the debt escalating. This targeted activity will be critical now as the numbers of cardholders missing one payment increases.

Another indicator of consumers reining in spending is in the total average sales on credit cards. This has dropped in September, in contrast to the summer months.

There is, however, another worrying trend in the percentage of payments to balance. Cardholders are starting to pay less than earlier in the year, perhaps suggesting they are no longer able to rely on pandemic savings. The percentage of accounts paying the full balance has also decreased for the last three months, which may be a reflection that customers are now not able to make the full balance.

Lenders can use segmentation analysis on their portfolios to ensure that their web and mobile applications encourage consumers in distress to make contact at the first indications of difficulty, and to consider establishing special payment plans for those struggling to stay on top.