"The growth in card spending far outstripped the growth in December retail sales compared to last year, which the government puts at 1.8 percent, excluding fuel," said Nigel Brayne, senior director of Global Business Consulting at FICO. "This suggests that many consumers shifted their spending to credit cards, perhaps so that they could pay for gifts over a longer period of time. Just as consumers are worried about their finances, card issuers will be monitoring their accounts closely for signs of delinquency."
For accounts on the books less than 12 months, FICO's data also showed a drop of 22 percent in the percentage of payments to balance, compared with December 2011. For these accounts, average total sales were up 4 percent over last year and utilization was up 5 percent.
"We recommend card issuers review the credit quality of their newly booked accounts," said Brayne. "By reviewing application score cut-offs and criteria, they can see whether they're booking a riskier population. They may also want to bring additional data into their origination decisions. If the credit quality has dropped, it's a good idea to review their initial line allocations, as our data shows these also rose since 2011."
Payment trends were still positive in the most recent data, with the percentage of balances that were two cycles (60 days) delinquent hitting a two-year low. "It will be interesting to see the impact of the Christmas spend on delinquencies next quarter, to see whether cardholders overreached in their spending," Brayne said.
The card performance figures are part of the data shared with subscribers of the FICO® Benchmark Reporting Service, which compares overall market performance in the UK cards market with individual card issuers' performance. The data sample studied represents 26 million accounts, or about half of all credit cards issued in the UK, and comes from client reports generated by the FICO® TRIAD® Customer Manager solution in use by most UK card issuers.
Card issuers that subscribe to the FICO® Benchmark Reporting Service receive a quarterly review of their portfolio compared to the industry, with 24 months' worth of data. For greater insight, subscribers can explore the data by vintage of accounts. For information on the FICO Benchmark Reporting Service, contact Stacey West at firstname.lastname@example.org.
FICO (NYSE: FICO), formerly known as Fair Isaac, delivers superior predictive analytics solutions that drive smarter decisions. The company's groundbreaking use of mathematics to predict consumer behavior has transformed entire industries and revolutionized the way risk is managed and products are marketed. FICO's innovative solutions include the industry-leading solutions for measuring credit risk, managing credit accounts, identifying and minimizing the impact of fraud, and customizing consumer offers with pinpoint accuracy. Most of the world's top banks, as well as leading insurers, retailers, pharmaceutical companies and government agencies, rely on FICO solutions to accelerate growth, control risk, boost profits and meet regulatory and competitive demands. Learn more at www.fico.com. FICO: Make every decision count™.
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Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the success of the Company's Decision Management strategy and reengineering plan, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, its ability to recruit and retain key technical and managerial personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to realize the anticipated benefits of any acquisitions, continuing material adverse developments in global economic conditions, and other risks described from time to time in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2012 and its last quarterly report on Form 10-Q for the period ended December 31, 2012. If any of these risks or uncertainties materializes, FICO's results could differ materially from its expectations. FICO disclaims any intent or obligation to update these forward-looking statements.
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