Increase in credit card missed payments

Latest research by FICO has shown that there was a significant rise in cardholders missing one credit card payment in December 2022.

The research showed that accounts missing one payment jumped month-on-month by 19%. The percentage of accounts with two missed payments was 19%  higher than in December 2021 and 20% higher for three missed payments.

The pattern of falling payments to balance also continued in December 2022 with a 2% month-on-month drop and a 4% year-on-year decrease.

The data showed average total sales up 9% over November 2022 at £825 whilst average balances rose by 5% month-on-month to £1,660.

Ficos says analysis of the largest consortium of UK cards data shows a convergence of rising prices and dwindling disposable income in December 2022. With average total spend at its highest and late payments rising significantly month-on-month and year-on-year, financial institutions will be particularly concerned as the focus on Consumer Duty heightens.

The Financial Conduct Authority’s (FCA) Consumer Duty rules, which will apply to new and existing products or services that are open to sale or renewal and come into force on 31st July 2023, require firms to act to deliver good outcomes for customers. They must be able to access products and services that meet their needs and offer fair value, as well as receive the support they need, when they need it. This includes financial institutions offering vulnerable customers other products with more suitable pricing etc.

As financial institutions face increasing numbers of late payments they will benefit from using optimised strategies to determine who and when to contact, and omnichannel communications to ensure those messages land. Those with the ability to incorporate digital-first communications will be in a much stronger position to deploy effective collections strategies.