Fewer Late Payments as Irish Economy Improves

The Irish economy’s move out of recession is reflected in the latest spending on credit cards data from FICO.

The predictive analytics and decision management software company reports that the latest figures on UK credit cards from its benchmarking service show that average total sales on cards issued in Ireland reached a two-year high in September of €778 per card, a 9% increase over September 2013.

 
Fico Irish credit cards data

 

 Veteran accounts (those five or more years old) had the highest average, at €791 per card. The ratio of monthly payment to balance reached 45%, also a two-year high. In another positive sign, the percentage of accounts that have missed two consecutive monthly payments fell to a two-year low.

“These trends give reason for cautious optimism,” said Stacey West, a Fair Isaac Advisors business consultant who works with UK card issuers. “They mirror the positive trends we have seen on cards overall in the UK. It will be interesting to see what effect the Christmas season has on spending and delinquencies.”

Although card spending is rising, interest income per account is dropping. For veteran accounts, interest income has fallen by 5% in each of the last two years. For the full set of active cards in the FICO consortium, this represents €2 per account in lost revenue for issuers.

“If time-bound, lower-interest balance transfer and purchase rates are impacting profitability, we recommend that issuers perform analysis to determine whether cardholders resume payment of interest income once the offers expire,” West said.

“Issuers may also want to create further incentives for cardholders, particularly those on books for a longer time, to increase their spending, which is turn will increase interest income.”

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