After the Turkey, CU Member Holiday Spending Rises Again

Consumers spent at higher levels than a year earlier in the week after Thanksgiving which traditionally has more online transactions, following a weak comparison for Thanksgiving week, according to a PSCU report released Monday.

The St. Petersburg, Fla.-based payments CUSO’s Transaction Trends Update also found improvement for consumer spending on goods during holiday season both via credit cards and debit cards.

In 2019, consumers followed the pattern of heavy in-store traffic on Thanksgiving and Black Friday. This year, consumer in-store traffic remained low with rising COVID-19 cases.

However, PSCU found the comparison for the week after Thanksgiving was more favorable because it included Cyber Monday and other events that rode the pandemic trend of rising online spending.

Glynn Frechette, SVP for Advisors Plus at PSCU, said growth rates rebounded to strong pre-Thanksgiving levels for both debit and credit cards in Week 49 — Nov. 30 through Dec. 6 this year.

“Following a dip in payment volume during the Thanksgiving holiday week, we saw a quick return to strong holiday spending buoyed by a record Cyber Monday,” Frechette said. “Strong performance in Card-Not-Present activity was fueled by healthy sales on Cyber Monday, strengthening cumulative holiday spending this season.”

Debit card spending remains well above last year’s results. For Week 49, debit purchases were 18.1% higher than a year earlier, and above the four-week average gain of 14.4%.

Credit card spending returned to positive territory in Week 49. Spending for the week was 5.7% higher than a year earlier and in line with the four-week average gain of 5.1%.

PSCU said consumers leaned into holiday shopping season that started Nov. 2 earlier this year, with many retailers advertising Black Friday sales throughout the month of November.

Consumer purchases of goods from Nov. 2 through Dec. 6 rose 19.3% for credit cards and 27.4% for debit cards compared with the same five weeks a year earlier.

“Goods remains one of the sectors positively impacted by the COVID-19 pandemic, with much higher Card Not Present (CNP) activity, as more consumers are holiday shopping online than in physical stores,” the report said.

Consumers have made 57% of their credit card purchases online so far during the holiday, up from about 47% a year earlier. About 40% of goods bought by debit were made online, up from about 32% a year earlier.

Average purchases within the Goods sector are up 4.5% for credit cards and 11.6% for debit cards.

Average holiday purchase amounts for online debit transactions are 14.4%, or $6.85, higher than the same five-week holiday period in 2019. For credit cards, average purchases rose 5.7%, or $4.35.

PSCU’s reports are made on a same-store basis, meaning a member credit union’s results are included only if it also has results for the prior period.

With the exception of Thanksgiving week, the volume of credit card purchases through the PSCU conduit has been rising at modest rates since late summer.

However, data from the Fed shows credit cards holders at credit unions and elsewhere continue to aggressively pay down their balances.

Data from the Fed’s G-19 Consumer Credit Reports show credit card balances began falling in April, a month after COVID-19 was declared a pandemic, and have fallen each month since then.

The Dec. 6 report showed lenders of all types held $942.8 billion in credit card debt on Oct. 31, down 10.3% from a year earlier and the lowest balances since it stood at $936.5 billion in May 2017.

The pattern is unlike the Great Recession, when monthly balances compared with a year earlier had median growth of 11.3% at credit unions and 7.5% at banks.

As of Oct. 31, credit unions held just over $61 billion in credit card debt, down 5.6% from October 2019 and the lowest since $60.5 billion in October 2018.