ST. PETERSBURG, Fla.–While consumer behavior remained positive in both credit and debit, changes in that behavior can be seen in new data, according to the October edition of the PSCU Payments Index.
According to PSCU, the goal of the Index is to provide information and insights to help financial institutions navigate the “evolving financial landscape to make informed, strategic decisions for their organizations and members.”
“Actions continue to speak louder than words,” PSCU said in releasing the Index. “Consumer payment behavior remained positive for both credit and debit in this month’s PSCU Payments Index despite a drop in consumer sentiment for September, while the 12-month rate of inflation remained unchanged. This month’s Deep Dive investigates discretionary spending trends in September results.”
Key Takeaways
Among the data points and takeaways from the report, according to PSCU:
- Consumer purchases maintained their consistent and positive trends in September, although were down from the prior-month growth. Year-over-year growth in debit purchases was up 5.6%, while credit purchases were up 1.4%. Transaction growth finished with debit up 4.6% and credit up 2.6% for the month.
- For credit and debit purchases in September, the largest contributor to growth was again the Services sector. Goods and Utilities were the only categories offsetting credit purchase growth, contributing to a 0.6% and 0.1% reduction, respectively. For debit purchases, all sectors contributed positively to year-over-year growth, PSCU said.
- Growth in discretionary spending remained strong in September, with debit purchases up 6.2% and credit purchases up 1.8%. Two-thirds of the growth in debit discretionary purchases came from the Entertainment sector – Online Gambling and Events (concerts). For credit discretionary purchases, Events (concerts) and Cruises were top contributors.
- Growth in Buy Now, Pay Later (BNPL)-related payments were strong when looking at the top providers, including Affirm, Afterpay, Klarna, PayPal (Pay In 4) and Sezzle. For September 2023, BNPL debit payments were up 28.0%.
- The credit card delinquency rate increased in September and finished at 2.23%, above the September 2019 pre-pandemic level by 32 basis points. Total credit card balances were up 11.6% for September compared to a year ago. The average credit card balance for active accounts was $3,001 for September, up 7.3% (or $204) year over year.
Adjustments in Spending Patterns
“Consumers adjust their spending patterns, shifting between discretionary and non-discretionary expenses based on changing priorities,” said James Wester, co-Head of Payments and director of Digital Assets and Cryptocurrency Practice at Javelin Strategy & Research. “The COVID-19 pandemic was a clear example – with a reduction in discretionary spending on items such as travel and entertainment, followed by an increased focus on essential non-discretionary purchases like replacing household items. As we look forward to 2024, it will be interesting to observe how tighter budgets may lead to a decline in discretionary spending.”
The full report is available for download here.
Just Because It’s Autumn Doesn’t Mean Falling for Schemes to Overcharge You for CU Industry News. Instead, Try This Crisp Offer
The biggest, best and freshest news reporting in credit unions remains free! Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more. So stop paying those bank-fee-like subscription prices from other so-called “news”” publications!
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?