UK consumers reduced average credit card spending in July, but outstanding active balances continued to climb, according to new analysis from FICO. The data points to a mixed picture for lenders: spending moderated, payment rates recovered slightly, yet missed payments continued to rise year over year as the UK’s new Buy Now Pay Later (BNPL) rules take effect.

Credit card spending falls while balances keep rising

Average UK credit card spending fell 2% month on month in July to £815, according to FICO’s latest credit card market analysis. At the same time, the average active balance increased 0.4% to £1,980, setting a record for the second consecutive month and leaving balances 4.7% above the level recorded a year earlier.

The divergence between spending and balances is important for banks and card issuers. Lower monthly spending does not necessarily translate into lower credit exposure when consumers are carrying more of what they already owe.

FICO also found a modest improvement in repayment behaviour. The proportion of overall balances being paid increased 0.9 percentage points month on month to 33.6% after falling in June. However, the improvement was not enough to offset deterioration in several delinquency measures.

The percentage of customers missing one payment increased 11.5% month on month. Average balances among those accounts remained at £2,495, 4.6% higher than a year earlier.

More serious delinquency also moved higher. Accounts with two missed payments increased 0.7% month on month and remained 11% above the year-earlier level, although their average balance declined 0.7% to £2,930. Accounts with three missed payments rose 9.6% month on month and 16% year on year, while their average balance increased 1.5% to £3,310.

For lenders, that pattern reinforces the importance of early-stage credit risk monitoring. A growing population of customers entering the first missed-payment cycle can become a more significant portfolio issue if repayment problems persist.

Credit growth remains elevated

The broader UK consumer credit market provides additional context. Bank of England data shows that net consumer credit borrowing reached £2 billion in July, up from £1.9 billion in June. Credit card net borrowing was £900 million, down from £1 billion in June, while annual growth in credit card borrowing remained at 12.5%.

Average credit limits in FICO’s dataset also increased to £5,995, 2.1% above the previous year. At the same time, the number of overlimit accounts fell 3.4% month on month. That suggests the market is not moving uniformly toward greater credit stress: some indicators improved even as delinquency measures worsened.

This mixed behaviour creates a more complex environment for banking technology and credit risk teams. Traditional payment and balance metrics can identify broad changes in portfolio behaviour, but lenders increasingly need granular data and analytics to distinguish temporary spending changes from emerging affordability problems.

BNPL regulation could reshape payment behaviour

July also marked a significant change in the UK payments and consumer-credit landscape. On 15 July, the Financial Conduct Authority began regulating Deferred Payment Credit, commonly referred to as Buy Now Pay Later, when it is provided by a third-party lender. Regulated providers must meet requirements including affordability assessments, clearer pre-contract information and support for customers experiencing repayment difficulties.

The FCA says its 2024 Financial Lives research found that 20% of UK adults, equivalent to 10.9 million people, had used BNPL during the 12 months to May 2024. The regulator also reported that the market had grown from £60 million in 2017 to more than £13 billion in 2024.

The regulatory change could influence how consumers distribute borrowing between payment methods, although the direction and scale of any shift remain uncertain. FICO has identified potential movement from BNPL toward credit cards as an issue for risk teams to monitor rather than as an established market outcome.

That distinction matters for digital payments platforms and banking technology providers. Changes in consumer-credit behaviour can affect transaction volumes, underwriting models, credit limits, collections workflows and fraud-monitoring systems at the same time.

Data-driven risk management becomes more important

For banks and card issuers, the July figures underline why credit risk cannot be assessed through spending levels alone. A customer may spend less in a given month while simultaneously carrying a larger balance and moving closer to delinquency.

Analytics platforms such as FICO increasingly sit within this broader financial technology stack, where payment data, credit histories and behavioural signals can support automated decision-making. The challenge for lenders is balancing faster intervention with responsible lending and accurate assessments of affordability.

As BNPL regulation changes the competitive landscape for short-term consumer credit, credit card providers will also need to monitor whether consumers change how they borrow and repay. July’s data does not establish that such a shift is already occurring, but it provides another reason for lenders to track payment behaviour across products rather than viewing credit cards in isolation.

For the UK financial technology sector, the result is a market where digital payments, consumer credit analytics and regulatory technology are becoming increasingly interconnected.

Market Landscape

UK consumer credit is entering a period in which Digital Payments Platforms, Open Banking Infrastructure, Embedded Finance Platforms and Banking Technology Innovation increasingly overlap with credit-risk analytics.

The Bank of England’s July figures show credit card borrowing continuing to grow annually, while FICO’s portfolio data highlights rising active balances and worsening year-on-year delinquency indicators. Meanwhile, FCA regulation of BNPL adds a new compliance layer to an established digital-credit market.

For banks and fintech providers, this increases the importance of real-time transaction data, affordability assessment, automated risk decisioning and cross-product monitoring.

Top Insights

• UK average credit card spending fell 2% in July, while average active balances reached a record £1,980 for the second consecutive month.
• FICO recorded an 11.5% monthly increase in customers missing one payment, highlighting continued pressure on early-stage credit performance.
• Three-payment delinquencies increased 16% year over year, while average balances for those accounts rose to £3,310.
• FCA regulation of third-party BNPL lending introduces affordability assessments and additional consumer protections from July 2026.
• Banks may need to monitor credit behaviour across cards, BNPL and other borrowing products as payment preferences evolve.

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