RANCHO CUCAMONGA, Calif.—Credit and debit spending was “flat” in August, according to Co-op Solutions’ credit union card portfolio data.
However, some merchant spend categories did see stronger growth, including the Education and Giving/Political classifications. The categories seeing strong declines included declines in the Campers & Camping, Entertainment, Government/Gambling, Home Improvement and Real Estate categories, Co-op said.
According to Co-op, the key spending trends its SmartGrowth team is watching include:
Education Spending Jumps as Students Hit the Books
According to Co-op’s month-over-month credit union portfolio data, education spending posted a huge increase in August, rising 70% in debit and 71% in credit.
“This is not surprising,” said John Patton, senior payments advisor for Co-op. “A big lift in the education category is expected as students prepare to go back to school in late August and early September. Families are purchasing books and supplies and paying their college tuition bills during this time.”
Spending Behaviors Shift Based on Household Needs
Whereas the year-long trend has been a sharp shift in spending from debit to credit, that narrative may be changing as U.S. consumers emerge fitfully from the pandemic period, just to face rapidly rising prices and a potential recession. Households are now starting to make pragmatic decisions on whether to use debit or credit based on their own unique circumstances, Co-op said.
Based on Co-op credit union portfolio data, overall credit transaction volume is up by 13.5% year over year, whereas for debit it has basically remained flat at just 0.6% growth. But in both July and August, credit and debit spending volumes behaved in lockstep from the prior month. It may be that many households are shifting to debit for their everyday spending needs while reserving credit for larger purchases, as a way to more effectively manage budgets, the company said.
“Consumers are making choices based upon their individual financial situations,” said Patton. “Households are deciding whether to pay with debit or credit depending on their unique circumstances, whether it’s for education, medical or everyday spending on groceries and gas. These are choices being made at the household level, and it’s reflected in our transactional data.”
Spending on Computers and Electronics Expected to Fall
According to Co-op’s August month-to-month credit union transactional data, the Computers merchant classification was flat in debit and fell roughly 2% in credit, but some expect a sharper fall-off in the coming months.
According to Co-op forecast projections, spending in the Computer category is expected to increase in credit through the fall, while falling off in debit.
Month-Over-Month Category-Level Spending (Comparing August 2022 to July 2022)
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