ST. PETERSBURG, Fla.—The effects of inflation can be seen in new data around CU member spending on their cards during the holidays, according to PSCU.
According to newest PSCU Payments Index, December’s growth rates finished slightly better than November’s growth rates for credit and debit cards.
“During the fourth quarter, we saw our members’ spending increase as the number of transactions per card held flat, an indication that the industry increase in holiday spending could be attributed to higher prices, not just higher purchase volume and elevated consumer confidence,” said Kate Rogers, vice president of Digital Payments and chief innovation officer with University of Illinois Community Credit Union. “This holiday season, our members also spent more on travel and transportation than a year ago, with automobile rental, transportation and airline spend increasing more than 40% per transaction, with the highest increases on credit cards. As consumers have refocused their budgets on essential items to combat inflation, we also saw increases per transaction reflected in experiential data, with up to double-digit increases in utilities and car repairs.”
Key Takeaways
According to PSCU, key takeaways from the January report include:
- Consumer spending growth on payment cards in December finished slightly better than November. “Credit card growth results continued to deflate as the year progressed before an uptick in December, while debit card growth was mainly consistent for 2022 and lower than growth on credit cards,” PSCU said. “For December, credit purchases were up 6.2% and debit purchases were up 3.7% year over year, while credit purchases were up 15.2% and debit purchases were up 5.2% for the full year. Inflationary pressures contributed to growth in purchases outpacing growth in transactions for the full year. For 2022, growth in overall transactions was up 12.0% for credit and 3.1% for debit.”
- The Consumer Price Index (CPI-U) decreased on an annual basis to 6.5% in December. Gasoline prices made the largest contribution to the decline, with the energy index decreasing 4.5%. The next Fed meeting will occur Jan. 31-Feb. 1, when it is anticipated that interest rates will increase by an additional 25 to 50 basis points, PSCU said.
- Year-over-year growth in holiday spending for the Goods sector improved in December as compared to November. “Year-over-year growth in purchases for the overall Goods sector was up 3.4% for credit and up 6.9% for debit in December,” according to PSCU. “For the cumulative holiday period in the Goods sector, growth in credit purchases was up 2.0% and growth in debit purchases was up 4.6%. Both Amazon and Walmart posted similar year-over-year results, with growth in credit purchases outpacing growth in debit purchases, while Target’s growth results were nearly flat compared to 2021.”
- The December average credit card balance per active account was $2,917, up 7.1% (or $193) year over year. “The credit card delinquency rate for December was 1.98%, marking the second straight month in which the difference when compared to the monthly pre-pandemic 2019 levels has been five basis points (November and December),” PSCU said.
The full report is available for download here.
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