ST. PETERSBURG, Fla.—Credit and debit growth rates were up in January over the final month of last year, reports PSCU, which also noted the credit card delinquency rate has now returned to pre-COVID levels.
Citing data from its latest Payments Index, PSCU said debit slightly outpaced credit growth in January.
“In addition, we are beginning to see growth rates for transactions and purchases converge for both products as the rate of inflation slows,” PSCU said.
Report Highlights
According to PSCU, highlights from the report include:
- For January, credit purchases were up 9% and debit purchases were up 7% year over year. Growth in transactions was also strong, with credit up 7% and debit up 6% year over year.
- The Consumer Price Index (CPI-U) decreased on an annual basis to 6.4% in January, down by 0.1 percentage points. Shelter accounted for nearly half of the all-items increase. “While Chairman Powell has signaled for another subsequent rate increase at the Fed’s next meeting on Mar. 21-22, the degree will be based on the strength of upcoming key metrics,” PSCU said.
- PSCU noted that in an effort to provide greater context around the growth in consumer payments and consumer sentiment, PSCU’s monthly data now categorizes all merchant categories into discretionary and non-discretionary spending buckets. For January 2023, the mix of discretionary/non-discretionary spending for credit purchases was 22% discretionary and 78% non-discretionary. For debit purchases, the ratio was 11% discretionary and 89% non-discretionary. “Consumers continue to show confidence in discretionary spending categories. For January, discretionary spending was up two percentage points for credit purchases and up 1% for debit purchases compared to January 2022,” PSCU said.
- The credit card delinquency rate for January returned to 2019 pre-pandemic levels, finishing at 1.97%. Total credit card balances are up 13.7% for January compared to a year ago, while the January average credit card balance per active account was $2,912, up 6.4% (or $176) year over year.
Enhancements Being Made
Meanwhile, PSCU said it is also introducing some new solutions.
“As we begin reporting 2023 payment performance and continue to evolve the PSCU Payments Index, we are excited to introduce several enhancements to bring greater clarity on trends in consumer sentiment and payment preferences,” said Mike Bell, VP, Insights at PSCU. “From the reorganization of merchant categories into more relevant groupings to the new reporting of payment trends in discretionary and non-discretionary buckets, we are committed to providing additional insights and value for our financial institutions. As an example, with the growth of P2P payments such as CashApp, Venmo, Zelle and PayPal, we hope that the new Money Services sector will provide a greater understanding of these payment options, which now account for 10% of all debit purchases.”
The full report is available for download here .
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