ST. PETERSBURG, Fla.—The trend of credit transactions outpacing debit continued in October, reported PSCU, which added early signs indicate holiday spending could be weaker this season.
The November edition of the PSCU Payments Index shows consumer purchasing growth for debit remained in the mid-single digits, as it has for most of the year, while credit card growth rates continued to outpace debit cards, according to the company.
“Yet credit card growth began to show signs of softening, with October posting the lowest growth rates of 2022,” PSCU said, adding that holiday spending appears to be off to a slow start, with fewer purchases in clothing and sporting goods showing shifts in consumer spending.
“In some good news, despite economic concerns, consumers are looking forward to the holidays; however, many have tightened their belts. Accenture’s U.S. holiday shopping research reveals that just over one-third (35%) of all consumers said they will try to stick to a holiday budget, and 45% are shopping at different times this year in search of the lowest prices,” said Casey Merolla, managing director at Accenture. “The research also highlighted that almost two-thirds are planning to spend the same or less than last year – with a third of those planning to spend more indicating they are involuntarily doing so due to inflation.
‘Uptick in Promotions’
“In response to this expectation, we are seeing an uptick in promotions and discounting from retailers as they work to earn their share of consumer spend,” Merolla said. “Holiday success for retailers will likely come from four key areas: enticing in-store experiences, meeting consumer demands for virtual goods and services, effectively processing returns in the face of ongoing supply chain and delivery partner challenges, and attracting and retaining additional workers for the busy holiday shopping season.”
Additional Highlights
Turning to PSCU’s data, November highlights include:
- Consumer spending on payment cards remained strong in October. Credit card results have slightly softened as the year progressed, while debit card growth remained lower than credit cards, which has been consistent throughout 2022. For October, credit purchases were up 10% and debit purchases were up 5% year over year. Year to date through October, credit purchases were up 17% and debit purchases were up 6%. Inflationary pressures continue to contribute to growth in purchases, outpacing growth in transactions. For October, growth in overall transactions was up 8% for credit and 3% for debit.
- The Consumer Price Index (CPI-U) decreased on an annual basis to 7.7% in October, influenced by higher prices in Energy and Food and lower prices in Used Vehicles, Medical Care, Apparel and Airline Fares. PSCU noted the Fed meets next on Dec. 13-14.
- In this month’s Deep Dive, PSCU said holiday spending appears to be off to a slow start, with fewer purchases in clothing and sporting goods showing shifts in consumer spending. Growth in purchases for the overall Goods sector was up 4.1% for credit and 2.9% for debit year over year in October. Amazon, which held its second Prime Day sale of the year on Oct. 11-12, posted stronger growth numbers than other featured retailers with credit purchases up 15.7% and debit purchases up 10.1%.
- The October average credit card balance per active account was $2,826, up 6.4% (or $171) year over year. Credit card balances surpassed the September 2020 results of $2,787 for the second time since the decline in card balances that began in early 2020. The credit card delinquency rate for October was 1.79%, 14 basis points lower than pre-pandemic October 2019 levels.
The full report is available here.