CUs Lose Share of Autos, Credit Cards

Conditions improve in June, but not as fast as at banks.

A Fed report showed credit unions lost ground to other lenders with both credit cards and auto loans in June.

But Fed’s G-19 Consumer Credit Report released Friday also found the recovery in credit card balances continued for a third month among all lenders and for a second month for credit unions. Banks and credit unions have reported rising credit card spending this year, while payoff rates have been slowly declining.

Prospects for that trend continuing were bolstered by the Bureau of Labor Statistics’ report Friday that showed a seasonally adjusted gain of 943,000 non-farm jobs from June to July, and upward revisions of job gains for May and June. Unemployment was 5.4% in July, down from 5.9% in June but still up from 3.5% in February 2020, the month before COVID-19 was declared a pandemic, sending jobless rates soaring and loan balances falling.

“The July jobs report was almost uniformly positive with strong job gains resulting in a large drop in the unemployment rate,” NAFCU Chief Economist Curt Long said. “The retail sector did not enjoy a share in the gains, losing over 5,000 jobs during the month, but otherwise gains were broad.”

The Fed’s G-19 report found all lenders held $1.28 trillion in car loans in June, up 7.1% from a year earlier.

But CUNA estimates released Wednesday showed credit unions’ auto loans grew only 3.5% to $392.8 billion. As a result, their share continued a general decline that began more than two years ago.

Credit unions’ share was 30.6% in June, down from 31.7% in June 2020 and 31.1% in March. It peaked at 32.6% in December 2018.

Banks and credit unions have reported rising credit card spending this year, while payoff rates have been slowly declining, allowing a slow rise in balances.

Credit unions held $61 billion in credit card debt on June 30, up 0.6% from May to June. Credit card balances typically rise 0.4% month-to-month from May to June, based on 10-year averages of Fed data for all lenders from 2010 through 2019. It also rose 0.4% in June 2020, three months after COVID-19 was declared a pandemic.

Still, credit card balances at credit unions were 6.5% below their February 2020 levels.

Credit unions’ share of credit card balances among all lenders was 6.4% in June, compared with 6.5% in May and 6.2% in February 2020.

Banks held $855.7 billion in credit card debt, up 2.2% from May to June but still 9.6% lower than in February 2020. Banks’ share was 90.0% in June, up from 89.8% and nearing their peak of 90.1% in February 2020.