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UK Cardholders Are Careful to Avoid Overlimit Penalties

There were three important messages about cardholder behavior coded in the latest FICO data on UK card performance.

First, despite a struggling economy, UK cardholders are doing a good job staying within their credit limits. Overlimit accounts among classic cards were at their lowest level — just over 2 percent of cards — since FICO began benchmarking performance in 2002. I’ve spoken before about credit cards as “survival tools,” and it certainly seems that cardholders in the UK are protecting theirs.

UK Cards Data May 2013

The second message is that newer cards look riskier. The percentage of balance paid reached a three-year high last quarter for “veteran” accounts open for more than five years (26 percent in January) and “established” accounts open for one to five years (30 percent in February). However, the same measure reached a two-year low in March for new accounts (just under 14 percent). New cards are also closer to their limits, with utilization at its highest level since the third quarter of 2008 — this compares with declining utilization for veteran and established cards.

Finally, the first quarter after Christmas showed an expected rise in delinquent accounts but then an instant fall in February or March. Usually, those holiday expenditures linger longer, meaning that UK cardholders are focused on paying down their debt more quickly.

All in all, it appears that UK cardholders are managing their debt carefully. The ones for portfolio managers to watch are those newer cards.

If you’re interested in getting your hands on the full complement of data every quarter from the FICO® Benchmark Reporting Service, benchmarking your portfolio against industry performance, contact Stacey West at staceywest@fico.com.

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