Key Takeaways:
British consumers are falling behind on credit card payments at the fastest pace in a year as the Strait of Hormuz blockade drives up living costs.
UK credit card holders missing one payment jumped 29.5% month-on-month in March to 1.7% of accounts, FICO data show, as the fuel crisis from the Strait of Hormuz blockade deepened structural affordability pressures.
"The sharp increase in customers missing one payment reflects a recurring pattern of March stress that was also evident in 2025," FICO said in its UK Credit Card Market Report published Thursday. "On-going pressure on personal finances, exacerbated by the fuel crisis pushing up the cost of petrol and diesel, is likely to have contributed to decreased spending."
Average spending fell 6.6% from February to £740, while the percentage of overall balance paid declined 1 percentage point to 33% — 3.7 percentage points lower than a year earlier. Customers with two missed payments rose 11.3% month-on-month and 14.3% year-on-year, reaching 0.4% of accounts. Average active balances slipped 0.8% from February to £1,925 but remained 4.3% higher than March 2025.
The deterioration signals that Britain's consumer credit cycle is entering a more stressed phase, with risk teams now watching whether March's one-missed-payment spike cascades into deeper delinquency over the spring and summer. "Collections strategies may need to be calibrated to address the higher balance levels now characteristic of delinquent accounts," FICO warned.
The data marks the first clear statistical evidence of how the Strait of Hormuz blockade — now in its third month — is transmitting through to UK household finances. Before the conflict, roughly a quarter of the world's seaborne crude oil and a fifth of its liquefied natural gas passed through the waterway, according to the New York Times. The resulting spike in petrol and diesel costs has compounded affordability challenges that have defined the UK card market since early 2025.
"It's not just a price shock, it's explicit shortages," Krishna Srinivasan, a director at the International Monetary Fund, told the New York Times. "In the context of shortages, industry scales back, people lose their jobs, and this has a secondary impact on growth."
Delinquency Trends Warrant Close Monitoring
The 29.5% month-on-month jump in one-missed-payment accounts echoes a similar spike in March 2025, suggesting a seasonal pattern. But the year-on-year deterioration is more pronounced for deeper delinquency: two-missed-payment accounts are up 14.3% from a year ago, while three-missed-payment accounts rose 6.8%. Average balances on delinquent accounts remain elevated year-on-year across all three categories, even as they edged lower from February.
The payment rate — the percentage of overall balance paid — has been a persistent concern. At 33%, it is 3.7 percentage points below March 2025 levels, though the year-on-year gap has narrowed from the 6% to 7% declines seen through much of last year. FICO described this narrowing as encouraging but cautioned that payment rates remain at low levels.
Average credit limits edged up 0.1% month-on-month to £5,950, a 2% increase year-on-year, while average overlimit spend rose 6.3% to £100 — 5.2% higher than a year ago, suggesting some cardholders are pushing against their borrowing ceilings.
Broader Economic Context
The FICO data, drawn from client reports generated by the FICO TRIAD Customer Manager solution used by about 80% of UK card issuers, provides a near-real-time window into consumer financial health. The March figures capture the period before the Easter holiday, when spending typically declines, but the magnitude of the delinquency spike exceeds normal seasonal variation.
For UK banks exposed to unsecured consumer lending, the trend signals rising credit risk. Shares of Lloyds Banking Group and Barclays, two of Britain's largest consumer lenders, could face pressure as investors reassess default expectations. The Bank of England's next Financial Policy Committee meeting will likely scrutinize household debt metrics, with the card data suggesting the consumer stress that began in 2025 is intensifying rather than abating.
This article is for informational purposes only and does not constitute investment advice.
