UK Credit Cards in 2025: Balances Reached New Highs While Payments Fell

Key Terms

delinquency financial

Delinquency occurs when a borrower fails to make a required payment on a loan or credit account by the due date. It signals that the borrower is behind on their commitments, which can increase the risk of losing access to credit and may lead to additional fees or penalties. For investors, higher delinquency rates can indicate potential problems in the lending or financial system, affecting the value of related investments.

pre-delinquency financial

Pre-delinquency describes a loan or borrower showing early signs of financial stress—such as late payments, missed notices, or other warning signals—before the account is formally classified as delinquent or in default. Investors pay attention because these warning signs act like a dashboard light for credit risk, helping anticipate higher losses, changes in interest income, reserve requirements, or the value of debt and securities tied to those loans.

affordability reviews financial

Affordability reviews are evaluations that check whether the price of a product, service or loan fits within the budget of the buyer or payer — for drugs and medical treatments this is done by regulators or insurers, and for loans by lenders assessing a borrower’s ability to repay. They matter to investors because favorable reviews can lead to wider access, reimbursements or loan approvals and higher sales or lower credit losses, while unfavorable findings can limit market uptake or increase financial risk — think of them as a budget check that determines whether people and institutions can actually buy what’s being offered.

Persistent affordability pressures push up average balances despite lower spending as consumers actively curtail discretionary expenditure

LONDON--(BUSINESS WIRE)-- According to analysis of its credit card data for 2025 by global analytics software leader FICO (NYSE: FICO), there was a fundamental shift in market dynamics from traditional cyclical patterns to clear management of affordability challenges. The year was characterised by consumers struggling to manage existing debt levels, with average balances reaching record highs while payment rates fell.

Highlights

• The upward trajectory of average balances was the defining trend of 2025, with year-on-year growth above 4.5% every month, reaching an all-time high of £1,950 in December
• There was also a deterioration in payment rates, with every month falling below 2024 levels
• The number of customers missing one payment dropped year-on-year, but the percentage of customers missing two and three payments trended upwards from May and June respectively, for the remainder of the year
• The number of customers using credit cards to withdraw cash followed seasonal trends, with summer peaks and winter troughs, but remained lower than in 2024

The data shows a very clear picture of consumers actively curtailing expenditure due to persistent affordability pressures. Spend was consistently lower than in 2024, average balances were higher and the percentage of overall balance paid dropped year-on-year.

Spending in Decline

From March 2025, as the cost of living increased, year-on-year spending declines persisted. Although it followed the expected seasonal patterns, with December reaching £831 and June peaking at £826, year-on-year these represented reductions compared to 2024.

Balances Rising

However, whilst spend dropped, balances did not, further underlining affordability pressures felt by UK households. Starting from £1,849 in January (+4.6% YoY), balances reached an all-time high of £1,950 by December (+4.8% YoY), with sustained elevation throughout the year. The persistent growth, occurring alongside reduced spending, clearly demonstrates the impact of deteriorating payment behaviours.

2025 saw a deterioration in the percentage of overall balance paid, with every month falling below 2024 levels. Beginning at 36.3% in January (-3.4% YoY), payment rates declined throughout the year, reaching 33.4% in November (-7.4% YoY) before stabilising at 33.4% in December (-6.8% YoY).

Missed Payments

The picture for missed payments also illustrates the juggling act many households faced through the year. Fewer accounts missed one payment than in 2024. However, the average balance for accounts missing one payment is higher than in 2024, and has been growing at a faster rate since May. This indicates that when customers experience payment difficulties in early delinquency, they do so with substantially higher debt loads than previous cohorts. Average balances for accounts with one missed payment reached £2,440 by December, representing an 8.2% year-on-year increase.

The percentage of customers missing two and three payments has trended upwards since the middle of the year and the average balance has also increased since 2024. Accounts with two missed payments peaked at £2,938 in November (+4.9% YoY) and those with three missed payments rose to £3,324 in December (+4.1% YoY).

The Picture for 2026

Heading into 2026, with other economic indicators still illustrating financial pressures, pre-delinquency intervention strategies will be critical for lenders, with authorisation transaction approvals closely monitored as customers reach their limit. Flexible payment options, affordability reviews, and balance management tools such as spending alerts and caps will help to prevent customers from accumulating high balances in early-stage delinquency.

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.

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Source: FICO