ST. PETERSBURG, Fla.—Strong consumer spending is continuing in 2024, but there is a growing reliance on credit, PSCU reported, citing data from its February Payments Index.
“While consumer spending trends remain positive, there is growing reliance on credit cards to finance this spending,” said Wendy Elieff, senior vice president, client service and marketing, TriVerity and The Loan Service Center. “In this month’s Deep Dive, we explore escalating delinquency rates, which are well above pre-pandemic levels. At a time when credit card interest rates have reached historic highs, many consumers who have been grappling with inflation for more than two years have likely depleted their savings and accrued higher credit card balances. The uptick in balances, coupled with the rise in delinquency rates, are indicative of financial strain, particularly among younger and lower-income households.”
Key Takeaways
PSCU said key takeaways from the February report include:
- Debit purchase growth, up 3.4% for January, again continued to outpace growth in credit purchases, up 1.1%. For transactions, debit grew 2.4% and credit grew 2.3% year over year.
- Delinquencies have been on the rise after bottoming out in May 2021 at 1.03%. Overall credit card delinquencies for January 2024 were 2.67%. We also see that delinquency rates lower as age demographics get higher. For year-over-year changes, there were notable increases for Older Millennials, up 0.77 percentage points to 3.86% for January 2024, and Gen X, up 0.63 percentage points to 2.55%, PSCU said.
- As CUToday.info reported earlier, it noted the Consumer Price Index (CPI-U) increased 0.3% in January, while the 12-month rate of inflation was 3.1%. Shelter contributed to over two-thirds of the increase. Excluding the volatile Energy and Food sectors, the core CPI index increased 0.4% from December, putting the 12-month Core CPI index at 3.9%.
- Through the lenses of Discretionary and Non-Discretionary purchases, growth in debit purchases, up 2.6% and 3.5% respectively, outpaced growth in credit purchases, each up 1.1%, PSCU said.
- The average credit card balance dropped in January, finishing at $2,915. “This was down $34, or 1.2%, compared to December 2023. Year over year, average credit card balances were up 4.0%, or $111. Total credit card balances were down 1.1% compared to December,” PSCU said.
The full report is available for download here.
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