CO-OP Sees Members Shift to Credit Cards

As the pandemic recession continues, consumers are shifting their purchasing from their debit cards to their credit cards, according to a report released Monday by CO-OP Financial Services, a payments CUSO based east of Los Angeles.

September transaction data from member credit unions shows credit purchase activity is picking up after months of depressed volume, while debit spending is beginning to slow.

The value of credit card spending in September was 17% greater than a year ago, while spending by debit card rose 9%. In August, spending rose 11% by credit card and 10% by debit card.

PSCU, a payments CUSO based in St. Petersburg, Fla., has been showing much higher growth by debit cards than by credit cards, which had largely been down through August among its member credit unions. Its Transaction Trends Update released Oct. 5 found spending by credit cards in the four weeks ending Sept. 27 was 4.3% greater than in four weeks ending Sept. 29, 2019, while debit card spending rose 18.5%.

The PSCU report released Monday showed credit card spending gains remain much lower than gains in debit card spending for the week that ended Oct. 4. However, credit card growth rates improved while debit growth weakened compared with the three weeks prior to Sept. 28 to Oct. 4 (Week 40).

For the week ending Oct. 4, PSCU found credit card spending grew 3.6%, its fifth consecutive week of positive growth, while debit card spending rose 14.6%.

CO-OP found August’s strong growth continued in September among essential categories, including home supply stores, hardware stores, discount stores and wholesale clubs.

“This aligns with consumers’ desire to conduct ‘one-stop shopping’ at big box retailers like Walmart, Target, Costco and Sam’s Club, where they can purchase necessities like groceries and medications along with home goods and other items. By visiting fewer stores, consumers hope to limit their exposure to COVID-19,” the CO-OP report said.

CO-OP found travel and leisure continued to struggle. Fast food restaurants were still depressed year-over-year, but are rebounding faster than dine-in establishments.

“Car rentals have been on an improving trend since the beginning of the summer, perhaps reflecting cardholders’ desire for ‘staycation’ and ‘local experience’ activities as safer and more economical alternatives to traditional vacations,” the report said.

CO-OP reported spending changes from September 2019 to September 2020 by these categories:

• Barber, Beauty Shops and Spas: Down 18% by credit card, down 16% by debit
• Hardware Stores: Up 37% by credit, up 40% by debit
• Grocery Stores: Up 24% by credit, up 6% by debit
• Online Bookstores, including Amazon: Up 59% by credit card, up 19% by debit.
• Airline Travel: Down 69% by credit card, down 46% by debit
• Car Rentals: Down 10% by credit card, up 5% by debit.