Credit Card Market Report by FICO UK: May 2025 Edition
The latest data on UK credit card debt and financial difficulty paints a complex picture, with some encouraging signs and areas of concern for lenders and consumers alike. According to the FICO® Benchmark Reporting Service, the average active balance on UK credit cards in May 2025 stood at £1,865, marking a 4.7% increase year-on-year. This rise in borrowing suggests that consumers are increasingly relying on credit cards, potentially due to financial pressures[1][2].
The total consumer credit borrowing also rose, reaching £1.6 billion in April 2025, up from £1.1 billion the previous month. While other forms of consumer credit increased slightly, the growth in credit card borrowing was a significant driver[1]. However, it's important to note that a majority of borrowers whose loan repayments have been declined report having funds available elsewhere, indicating some financial resilience among consumers[1].
One area of concern is the slight upward trend in the ratio of the average delinquent balance to the overall balance. This, coupled with the 5.8% decrease in the percentage of overall balance paid year-on-year, may signal a potential increase in financial difficulty[1][2]. Lenders may wish to review pre-delinquency strategies and consider adopting or revisiting balance segmentation in risk strategies[1][2].
In a positive development, missed payments have fallen across all delinquency periods year-on-year. The percentage of customers missing one payment decreased by 12.4%, while for those missing two payments, there was a 9.6% decrease month-on-month and an 8.1% decrease year-on-year. However, the percentage of customers missing three payments increased month-on-month by 3.9%[1][2].
Another critical sign of financial difficulty could be the increase in the percentage of customers using credit cards to take out cash. This figure has risen by 2.5% month-on-month[1]. Spending, in general, has decreased by 4.1% month-on-month and 1.7% year-on-year, to an average of £790[1].
Card fraud remains a growing concern, with UK card fraud losses rising by about 4% to £572.6 million in 2024. "Card Not Present" fraud, which involves remote transactions, is the largest and fastest-growing category[3]. This growing fraud risk adds to consumers' financial vulnerability and affects confidence in payment methods.
A recent FICO survey shows that UK consumers lag behind some European peers in adoption and trust of real-time payments (RTP). Only 35% of UK consumers consider RTP more secure than credit cards, contributing to ongoing caution around financial transactions amid mounting fraud losses estimated near £450 million[4].
In conclusion, while some consumers report having alternate funds, the overall financial environment points to tightening conditions and elevated risks of financial difficulty. These trends, corroborated by FICO's survey highlighting concerns over payment security and fraud, underscore the need for continued vigilance and strategic review by lenders and consumers alike[1][2][3][4].
References: [1] FICO® Benchmark Reporting Service, May 2025. [2] FICO® TRIAD® Customer Manager solution, data from client reports. [3] UK Finance, UK Card Fraud Statistics, 2024. [4] FICO Consumer Survey, Payment Security and Fraud Concerns, 2025.
Personally managing one's finances becomes crucial in light of the increasing reliance on credit cards and the rising total consumer credit borrowing, as highlighted in the recent data on UK credit card debt and financial difficulty. Lenders might want to consider adopting or revising balance segmentation in risk strategies due to the upward trend in the ratio of the average delinquent balance to the overall balance.
The decrease in missed payments across all delinquency periods is a positive sign, yet an area of concern is the increase in the percentage of customers using credit cards to take out cash, which could be a signal of potential financial difficulty. Consumers' financial vulnerability is further intensified by the growing card fraud risk, particularly in remote transactions.
