Persistent affordability pressures push up average balances despite lower spending as consumers actively curtail discretionary expenditure
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.
The year was characterised by consumers struggling to manage existing debt levels, with average balances reaching record highs while payment rates fell.Share
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.
