Credit Union Members Trying to 'Resume Normal Spending Levels,' New Data Shows
CO-OP's new spending data indicates a short-term desire for members to spend as they did in pre-COVID days.
Consumer spending appeared to pick up in June as more states lifted lockdown orders and businesses began to reopen, a rebound that came on the heels of increased purchasing in May, according to a new report by CO-OP Financial Services.
The total dollar amount of purchases in June increased 3% for credit card spending and 14% for debit transactions compared to last year, the analysis showed. Still, overall debit and credit purchases dipped 2% and 5%, respectively, from the same month in 2019.
“The data indicates that members are likely to resume normal spending levels in the short-term despite the long-term uncertainty of COVID-19. It also shows that spending will vary widely across merchant categories, reinforcing the importance of credit unions regularly analyzing their portfolio to identify top-of-wallet opportunities,” CO-OP said.
Indeed, in some categories, spending increased markedly year-over-year. And in sectors harder-hit by the coronavirus outbreak, namely the airline industry, there were precipitous declines in transaction activity compared to June 2019.
Spending on barbers, beauty shops and spas sank more than 30% (34% for debit and 37% for credit transactions) in June compared to the same period last year, according to the CO-OP analysis. The report showed that, even after some health and beauty businesses reopened in June, “most members are holding off on that post-pandemic haircut (or perhaps continuing to do it themselves).”
“This may change in July as more businesses begin to implement safety precautions and procedures to put their customers at ease,” CO-OP said.
Meanwhile, debit and credit spending on air travel fell 59% and 71%, respectively, in June 2020 from the same month in 2019, revealing consumers’ continued reluctance to take to the skies even as airlines significantly lower fares.
Other sectors saw steep increases in purchase activity. Debit and credit purchases at hardware stores, for instance, rose by more than 30%, continuing a weeks-long trend of increased spending on home improvement. Meanwhile, in June, debit and credit spending increased 28% and 57%, respectively, on online bookstores, according to the report.
“June was another strong month for purchases at online bookstores, specifically Amazon. Amazon continues to be a strong top-of-wallet opportunity for credit unions, particularly as the marketplace begins offering summer deals and discounts,” CO-OP said.