UK consumer activity is on the rise as highlighted by June’s figures with credit and debit card spending, based on Bank of England interbank CHAPS payments data, rising to 102% of its February 2020 average in the week to June 30, up two points on the week.

It is also encouraging that UK Finance’s latest figures show that overdraft usage continues its gradual return to pre-pandemic trend rather than any unexpected sharp increase, and the proportion of credit card balances that are not paid off each month continues to trend down.

Numbers from FICO always merit the greatest of respect and its latest UK credit card market report shows just the earliest of signs of the impact of the widely reported cost-of-living pressures. FICO reports a rise in card spend and balances, but also a slight increase in missed payments.

The signs of the cost-of-living crisis are still limited, with the biggest area of concern being a 3% increase in the average one payment missed balance month over month for new cardholders (less than 12 months). As FICO notes, the higher-risk accounts are more credit hungry, so lenders will want to be vigilant in monitoring this trend.

Only yesterday, Charlie Nunn, the head of the UK’s largest retail bank by market share, Lloyds, said the bank had seen the number of customers with persistent debt problems jump by almost a third in the past year. No doubt the position will become clearer when the banks report second quarter numbers.

The banking sector performed admirably during the pandemic in contrast with its conduct during the 2008 financial crisis-lessons were definitely learned in how to treat vulnerable consumers. The latest numbers from UK Finance are not yet evidence of any cause for panic. But with consumers facing increasing inflationary pressure as the cost-of-living challenge accelerates, UK banks will be expected to demonstrate a willingness to exercise their range of forbearance tools.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.