Increase in missed payments on “veteran” credit card accounts

The position of these accounts, defined as those who have been open for five or more years, will - according to the credit scoring company - be of concern for credit card providers as these are considered low risk by lenders. Additionally, the percentage of cardholders missing one payment is also rising.  

However, the overall average balance for customers missing two payments is trending downwards, suggesting 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, according to FICO, will now be critical as the number of cardholders missing one payment increases.  

Another area highlighted was how consumers were reining in their spending in the total average sales on credit cards. This has dropped in September when compared to the summer months.

 
In contrast, another worrying trend in the percentage of payments to balance. Cardholders are starting to pay less than earlier in the year – potentially suggesting, according to FICO, they’re 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.  

Looking at the data as a whole, the average total sales were £775 – 4.56% lower than in August, with the average active balance also dropping to £1,595 – 1.14% lower than August and reversing the upward trend seen over the previous 18 months.

Additionally, customers missing one payment increased by 8.3% compared to August and 9.1% year-on-year, while accounts with two missed payments increased marginally month on month – by 0.6% – but those missed three payments increased by 3.7% compared to August.