Consumers Signal Start of Holiday Spending

Credit union members spent enough on their credit cards in the week ending Nov. 15 to beat year-ago levels by the highest rate since the COVID-19 pandemic began in March, according to a PSCU report released Monday.

The St. Petersburg, Fla.-based payments CUSO’s Transaction Trends Update also showed an especially large increase in spending on goods, which it said showed consumers weren’t waiting for Thanksgiving to start making holiday purchases.

Glynn Frechette, SVP for Advisors Plus at PSCU, said debit card spending continues to grow at twice the normal rate from past years and is impressive, given the rise in COVID-19 cases. And he said the record gain for credit card spending was another positive sign for the start of the holiday spending season.

“Despite the surge in COVID-19 cases around the country, spend in the goods sector showed a healthy increase, indicating holiday spending is well underway,” Frechette said. “As we move into Thanksgiving week, we will closely monitor consumer buying behavior during the upcoming Black Friday and Cyber Monday shopping days with interest.”

Debit card purchases for Week 46, which ended Nov. 15, were 16.6% higher than Week 46 in 2019, and matched the four-week average growth rate.

Credit card spending has been weaker than debit spending since the pandemic. Moreover, balances have been dropping for both banks and credit unions as households choose to pay down their balances more aggressively.

PSCU found credit card spending in Week 46 rose 7.4% from a year ago, the eleventh week in a row with a gain, and beating the four-week average gain of 5.1%.

Consumers spent 33.7% more on goods through their debit cards, compared with a 26.7% year-ago gain for Week 45. Credit card purchases of goods rose 26.5%, an improvement from the 15.9% year-ago gain for Week 45.

Grocery spending for Week 46 rose 12.6% via debit and 23.9% by credit card.

Gasoline remained substantially down. For Week 46, purchases were below 2019 levels by 12.9% by debit and 21.8% by credit cards.

For credit card spending, the largest gains were in the Southeast (+9.6%) and Southwest (+9.3%), while the lowest were in Hawaii (+2.1%) and New England (-0.9%).

For debit cards, the strongest gains occurred in the Great Lakes (+19.1%) and Southeast (+17.5%), while the weakest were in Hawaii (+12.4%) and the Rocky Mountain states (+12.2%).

PSCU’s reports are on a same-store basis, meaning a member credit union’s results are included only if it also has results for the prior period. In Week 46 the report was based on 9.2 million credit transactions and 38.7 million debit transactions.