ST. PETERSBURG, Fla.– During March, slowing economic growth was prevalent in multiple key indicators, including consumer purchasing behavior, according to the newest PSCU Payments Index.
The objective of the Index, said PSCU, 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.”
“March 2023 data revealed softening consumer spending and lower average purchases for both credit and debit cards,” PSCU said. “The year-over-year growth rate in transactions was greater than the growth rate in purchases for both credit and debit cards, resulting in a drop in both average purchase amounts.”
In releasing its data, PSCU noted the Consumer Confidence Index increased slightly in March to 104.2 (1985=100). The 0.3 increase in March comes from an improved outlook from participants under the age of 55 and households earning over $55,000.
A First
“March revealed further signs of softening in consumer purchasing, with spending growth remaining in the low single digits. For the first time since 2020, transaction growth for credit and debit surpassed purchases,” said Jeremiah Lotz, managing vice president, digital and data at PSCU. “In this month’s Deep Dive, we provide a new perspective on the primary ways credit and debit cards are used by defining Digital Payments compared to Physical Card payments or true ‘card in hand’ uses. As we reach the two-year anniversary of the PSCU Payments Index, we continue to evolve the report’s data view and analysis to provide relevant insights in the changing financial landscape.”
Key Takeaways
According to PSCU, some of the key takeaways from the most recent report include:
- Transactions grew at a higher rate than purchases for both credit and debit cards in March compared to a year ago, showing further evidence of temperance in consumer spending in the market. “This phenomenon last occurred on credit cards in May 2020, when both transaction growth and purchase growth were negative. This result has not occurred on debit cards in PSCU Payments Index reporting or weekly transaction trends reporting since PSCU began this reporting in early 2020.”
- For March, both credit and debit transactions were up 5% year over year. Credit purchases were up 3% and debit purchases were up 4% for March. “This was the lowest year-over-year growth for credit card purchases since August 2020, when it was -1%,” PSCU said.
- Growth in discretionary spending on credit cards (transactions up 4% and purchases up 6%) is slowing at a greater rate than non-discretionary spending. “For debit cards, March growth improved for discretionary and non-discretionary transactions, up 8% and 4% respectively. For debit purchases, discretionary spending was up 8% and non-discretionary spending was up 3% for March.”
- Digital Payments (defined as all Card Not Present, Mobile Wallets and tokenized activity) were significant and represented 44% of all credit transactions and 58% of all credit purchases in March 2023. “For debit, Digital Payments made up 37% of all debit transactions and half of all debit purchases,” the company reported.
- Credit card balance transfers generally peak in both the number of transactions and the transferred amount in March of each year. Total balance transferred dollars were up 13% compared to March 2022 and the average balance transfer was $4,414, up 14% year over year.
- The credit card delinquency rate for March finished at 1.82%, above the March 2019 pre-pandemic level by 0.09%. “Total credit card balances were up 13.2% for March compared to a year ago, while the average credit card balance for active accounts was $2,917, up 8.3% (or $223) year over year.”
The full report is available for download here .
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