UK credit card payment rates fall as balances rise

FICO reported a fall in UK credit card payment rates and a rise in balances in June. The data also showed year-on-year increases in missed payments across one, two and three billing cycles.

Average spend rose 5.6% from the previous month to £835, while the average active balance increased 1.4% to a record £1,975. That was 4.7% higher than a year earlier, adding to signs that households are carrying more debt even as repayment rates weaken.

The proportion of balances paid fell 2.4% month on month to 33.3%. It was also 4.4% lower than a year earlier.

The figures point to continued pressure on consumer affordability as summer spending increased. Lower repayment rates also contributed to an annual rise in the number of accounts with one, two and three missed payments.

Across early-stage arrears, the monthly trend was uneven but consistently worse than a year earlier. The share of customers missing one payment rose 7.7% year on year, and the average balance on those accounts was 4.1% higher.

Among customers missing two payments, the number rose 5.5% from the previous month and 9.1% from a year earlier. The average balance in that category increased 2.2% year on year.

For customers missing three payments, the number of accounts was 14.3% higher than a year earlier. The average balance in that group rose 1.9% over the same period.

Average credit limits edged up 0.2% month on month to £5,985. They were still 2.0% higher than a year earlier.

Affordability pressure

In FICO's assessment, June presented a mixed picture. Higher spending could suggest some economic confidence, but it was not matched by the share of balances repaid, which fell both month on month and year on year.

Payment rates remained near historically low levels and close to the pre-pandemic average of 30%. The combination of stronger spending and weaker payments has kept average active balances at record levels through 2025 and into 2026.

One part of the monthly data showed some improvement, with better month-on-month performance in accounts that were one and three cycles overdue. But that was offset by deterioration in the two-cycle category, and all three delinquency groups remained above their levels of a year earlier.

According to FICO, that pattern extends a trend that emerged in the second half of 2025 and has continued through 2026. The figures suggest underlying affordability pressures have not eased.

Risk focus

The report is likely to be closely watched by lenders and credit risk teams because it points to stress emerging before accounts move deeper into arrears. Rising balances among customers who have already missed payments can make delinquency harder to reverse and increase losses if conditions deteriorate further.

FICO said lenders should closely monitor how customers move through different stages of delinquency. Pre-delinquency intervention strategies should also remain calibrated to reflect the higher balance levels now seen among customers in financial difficulty.

The figures form part of data supplied through FICO's benchmark reporting service. The sample is drawn from client reports generated by the company's TRIAD Customer Manager system, which is used by about 80% of UK card issuers, according to FICO.

"June 2026 continued to present a mixed picture for consumer affordability. An increase in spending could, potentially, be seen as a good sign of economic confidence, however, the increase in spending was not matched by the percentage of overall balance paid, which fell on the previous month and year, reversing the previous recovery and continuing its persistent downwards trend. And with an increase in late payments across one, two and three months, a record-high average active balance will be of concern to risk teams," FICO said.

"June credit card data indicates that underlying affordability pressures remain significant. Risk teams should maintain heightened monitoring of delinquency progression through the cycle buckets and ensure pre-delinquency intervention strategies remain calibrated to address the elevated balance levels now characteristic of customers in financial difficulty," FICO said.