UK credit card debt up as spending slows, missed payments rise

New data from FICO has highlighted increasing financial pressures on UK households in early 2025, as average credit card spending fell while outstanding balances rose compared to the previous year.

According to figures from FICO, average spend on credit cards decreased by 6.8% compared to February 2025 and by 3.7% year-on-year. The reduction in consumer expenditure follows established seasonal patterns of lower post-Christmas spending, but the data also points to additional signs of financial strain for many households.

Despite the drop in spending, the average balance on credit card accounts rose by 4.9% year-on-year, reaching GBP £1,845 in early 2025. Payments made to reduce balances were down by 1.6% compared to the previous month and by 5.8% compared to March 2024. According to FICO, this combination has led to higher levels of debt on average than in the previous year.

One of the more marked findings in the report is the significant increase in missed payments. The number of customers missing one payment in March rose by 23% compared to February 2025. These customers also had an average balance that was 5.6% higher year-on-year, according to the data. The trend is particularly pronounced among established customers who have had their credit cards for between one and five years and who missed a payment in March.

"With spend 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," FICO stated.

"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," the company commented on late payment trends.

While the report showed a slight decrease in the proportion of customers missing two credit card payments—down 0.2% month-on-month and 3.8% year-on-year—there has been a continual increase in customers missing three payments since late 2024. For those with two missed payments, the average balance was GBP £2,875, 2.5% higher than in February and 6.4% higher than the same time last year. For those with three missed payments, the average balance was GBP £3,220, up 0.9% on the previous month and 6.6% on the prior year.

"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," FICO stated, highlighting these trends.

Although delinquent balances are on the rise, they are increasing in proportion to overall balances held on credit cards, at least in cases of one missed payment.

"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," FICO reported.

There was also a continued decline in the use of credit cards for cash withdrawals. The percentage of customers using their cards for this purpose fell for the sixth consecutive month, standing at 2.9%. This represents a 2.1% decrease from the previous month and an 8.7% decrease year-on-year.

FICO suggested that card issuers should take a detailed look at their collections strategies in the current environment.

"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. Particular focus should be given to customers who have had their cards between one and five years, especially for those who are coming off promotional offers and who may now be struggling to pay off higher APRs," FICO stated.

The figures are based on data collected from client reports generated by FICO's TRIAD Customer Manager solution, which is currently used by around 80% of UK card issuers.