UK Consumers Rein In Credit Card Spending in July but Balances Hit Record High for Second Month

After an increase in spending on credit cards in June, data analysis by global analytics software leader FICO (NYSE: FICO) shows a drop in July. However, despite lower spending, the average active balance climbed to a new record high for the second consecutive month. With payment rates displaying a modest month-on-month recovery but remaining below last year's levels, and late payments continuing to deteriorate year-on-year, risk teams will need to retain heightened monitoring.

The consequences of the new FCA regulation for the Buy Now Pay Later sector, introduced on 15th July 2026, could also see a shift in spending to credit cards, which could put some modest upward pressure on average active balances over the coming months.

Highlights

• Average spending fell 2% month-on-month to £815.
• Average active balance increased by 0.4% month-on-month to £1,980, reaching a record high for the second consecutive month and remaining 4.7% higher year-on-year.
• After falling in June, the percentage of overall balance paid rose by 0.9% month-on-month to 33.6%.
• The percentage of customers missing one payment increased by 11.5% month-on-month, while average balances for these accounts remained flat at £2,495, but is 4.6% higher year-on-year.
• There was a marginal increase of 0.7% in the percentage of customers missing two payments, but this is still 11% higher year-on-year – although the average balance decreased by 0.7% month-on-month to £2,930.
• Accounts with three missed payments rose by 9.6% month-on-month, and 16% year-on-year, with balances increasing by 1.5% month-on-month to £3,310.
• Average credit limits increased to £5,995, remaining 2.1% higher than the previous year, although overlimit accounts decreased by 3.4% month-on-month.

FICO Comment:

There were some encouraging signs in July 2026, relative to recent months. However, record-high average active balances and continued year-on-year late payment deterioration across all three cycles confirm that affordability pressures are very real concerns for UK consumers. Moderation in year-on-year balance growth for two- and three-cycle delinquent accounts, combined with overlimit accounts running almost flat year-on-year, suggests that while more customers are falling into arrears, those already in the most severe stages of delinquency are not seeing their balances escalate as rapidly as previously.

Risk teams should continue to focus on early intervention for the growing one-month missed payment customers, as well as monitor the balance patterns for accounts with three missed payments.

Other factors that should be monitored by risk teams include the possible consequences of the new FCA regulation for the Buy Now Pay Later sector, requiring firms to carry out an affordability assessment before extending credit. The new checks may see some customers declined, who would previously have been accepted for BNPL. Where these customers also hold a credit card, spending is likely to shift onto that card.

Separately, recent research by StepChange found that around eight million UK adults find keeping up with their credit card repayments a large burden every month, while around five million have recently used a credit card to pay for essential household bills such as food, energy or fuel. Alongside July's record balances and persistent late payment growth, this indicates that a meaningful segment of cardholders is already leaning on credit to manage day-to-day essentials.

Risk teams should consider both dynamics when calibrating affordability assessments and collections strategies over the coming months.

These card performance figures are part of the data shared with subscribers of the FICO® Benchmark Reporting Service. The data sample comes from client reports generated by the FICO® TRIAD® Customer Manager solution in use by some 80% of UK card issuers. For more information on these trends, contact FICO.

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