FICO flags rise in missed credit card payments in UK

FICO reported a rise in missed credit card payments in the UK in March, pointing to worsening strain on household finances.

Its latest market data showed average credit card spending fell 6.6% month on month to £740, while the share of balances repaid dropped to 33%. Average active balances edged down 0.8% from the previous month to £1,925, but remained 4.3% higher than a year earlier.

The sharpest deterioration came in early arrears. The percentage of customers missing one payment rose 29.5% from February, while the share missing two payments increased 11.3% month on month and 14.3% year on year.

Accounts with one, two or three missed payments all recorded slightly lower average balances than in the previous month, but each category remained above levels seen a year earlier. That marks a shift from the improvement visible in the same period last year.

The data covers card performance reported through FICO's Benchmark Reporting Service and is drawn from reports generated by its TRIAD Customer Manager system, used by about 80% of UK card issuers.

Spending pressure

March is usually shaped by seasonal spending patterns ahead of Easter, but the latest figures also reflect broader pressure on consumers. FICO linked weaker spending and payment performance to a fuel crisis tied to disruption in the Strait of Hormuz, which has pushed up petrol and diesel costs.

That pressure showed up in both customer behaviour and balance trends. Although active balances fell modestly after Christmas, they have stayed elevated compared with the same period last year, suggesting borrowers have not materially reduced their reliance on revolving credit.

The repayment picture was also weak. The proportion of balances repaid slipped 1% from the previous month and was 3.7% lower than a year earlier, continuing a seasonal decline typically seen before summer.

The year-on-year decline in repayment rates has narrowed from the 6% to 7% falls recorded through much of last year. Even so, payment levels remain low by recent standards.

Rising arrears

For lenders, the more pressing issue is the increase in delinquency. The rise in customers missing one payment echoed a similar jump recorded in March last year, raising the prospect that a seasonal pattern is becoming more severe rather than easing.

The increase in customers with two missed payments is likely to draw particular scrutiny because it can signal that temporary payment difficulty is turning into more persistent financial stress. A year-on-year increase in that category suggests the problem is not confined to a single monthly fluctuation.

FICO also highlighted that all delinquency categories were higher than a year earlier. While the growth rate of delinquent balances has moderated, especially among accounts with two and three missed payments, the overall market picture still points to structural affordability pressure.

That leaves banks and card issuers weighing whether the March spike in early arrears will feed through into more serious defaults in the months ahead. Collections and risk teams are likely to watch closely how many customers who have missed one payment move into two or three missed payments as seasonal spending rises through spring and summer.

The figures add to evidence that unsecured consumer credit remains under strain, even where some month-on-month indicators have stabilised. Lower spending does not necessarily signal stronger finances when repayment rates are also falling and arrears are increasing.

Average balances on delinquent accounts remain above last year's levels, meaning lenders may be dealing with larger sums once customers fall behind. That can make collections more complex, particularly if higher fuel and transport costs continue to squeeze disposable income.

"An area of concern for risk teams will be the notable increases in March across early and mid-stage late-payment categories. The sharp 29.5% month-on-month increase in customers missing one payment reflects a recurring pattern of March stress that was also evident in 2025. The 14.3% year-on-year increase in customers with two missed payments is especially notable and warrants careful monitoring to assess whether this represents a seasonal spike or a more sustained deterioration," FICO said.