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Steady increase in credit card usage
The percentage of consumers using their credit card to take out cash has steadily increased over the three months to August, according to FICO’s latest UK credit card market report.
Senior Journalist, covering the Credit Strategy and Turnaround, Restructuring & Insolvency News brands.
Senior Journalist, covering the Credit Strategy and Turnaround, Restructuring & Insolvency News brands.
In June, this increased by 6.7% and 3.4% in July. According to the data analytics company, this is a clear indicator of financial stress as the interest charged for cash on credit cards is always higher than standard purchases.
The total average sales made on credit cards also increased across the summer, going up by more than 14% year-on-year for the three months - hitting £790 in June and July and £810 in August.
As for the percentage of missed payments, this sends confusing messages to lenders. In June cardholders who missed one payment remained almost static but increased in July by 2.2% before dropping by 4.6% in August.
However, the percentage of cardholders missing two or three payments increased in August compared to July by 8.5% and 9.3% respectively.
This, according to FICO, suggests cardholders who miss more than one payment may not have the funds to catch up and are struggling with over-indebtedness. There’s also evidence the percentage of cardholders spending over their credit limit has been slowly trending upward since March.
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