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

UK card data for July 2026 shows record-high average balances and rising delinquencies despite lower spending, as new BNPL rules may push more use onto cards.

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FICO UK Credit Card Market Report for July 2026 underlines need for vigilance by risk teams as affordability rules of new BNPL regulations could shift more spending onto cards

LONDON--(BUSINESS WIRE)-- 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 15^th 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.

Key Trend Indicators – UK Cards July 2026
Metric	Amount	Month-on-Month Change	Year-on-Year Change
Average UK Credit Card Spend	£815	-2.0%	+1.8%
Average Card Balance	£1,980	+0.4%	+4.7%
Percentage of Payments to Balance	33.6%	+0.9%	-3.6%
Accounts with One Missed Payment	1.5%	+11.5%	+9.1%
Accounts with Two Missed Payments	0.3%	+0.7%	+11.0%
Accounts with Three Missed Payments	0.2%	+9.6%	+16.0%
Average Credit Limit	£5,995	+0.2%	+2.1%
Average Overlimit Spend	£95	+2.1%	+5.5%
Cash Sales as a % of Total Sales	0.8%	+0.6%	-2.4%
Source: FICO

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.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 80 countries do everything from protecting 4 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by 90% of top US lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency. Learn more at www.fico.com.

FICO and TRIAD are registered trademarks of Fair Isaac Corporation in the United States and other countries.

View source version on businesswire.com: https://www.businesswire.com/news/home/20260921393022/en/

For further press information please contact:
FICO UK PR Team
Wendy Harrison/Matthew Enderby
ficoteam@harrisonsadler.com
0208 977 9132

Source: FICO

Key Terms

bnpl financial

Buy Now, Pay Later (BNPL) is a service that allows consumers to purchase items immediately and pay for them over a set period, often through installment payments. For investors, BNPL companies represent a way to facilitate spending and generate revenue from transaction fees and interest, making them an important part of the evolving digital payments landscape.