CU Member Spending Rises Again in February
Payments CUSOs find strong gains, especially by credit cards.
Payment CUSOs found members continued to accelerate spending in February, including travel, and continue shifting more of their purchases from their debit cards to their credit cards.
The PSCU Payments Index found gains in spending from February 2021 to February 2022 were 27% by credit cards and 14% by debit. On Wednesday, the Census Bureau reported retail spending, excluding cars and parts, was $527.8 billion, up 17.7% from a year earlier.
“Overall consumer spending growth remained strong throughout February, with credit continuing to greatly outpace debit and the Travel and Entertainment sectors experiencing the highest growth once again,” Karen Postma, vice president of risk analytics at PSCU, said.
By merchant type, Census and St. Petersburg, Fla.-based PSCU reported these changes from February 2021 to February 2022:
- Groceries rose 12% by credit and 3% by debit. Census reported a gain of 8.4%.
- Gasoline spending rose 60% by credit and 35% by debit. Census reported a 37% gain.
- Restaurants rose 52% by credit and 23% by debit. Census reported a 33% gain.
Beth Phillips, director at Co-op Solutions of Rancho Cucamonga, Calif., said fear and uncertainty concerning evolving economic and geopolitical factors, along with increasingly competitive rewards programs, will spur consumers to shift even more of their spending from debit to credit, after a steady move toward debit during the first year or so of the pandemic.
“One reason why consumers are moving to credit from debit are the rich rewards offered on their credit card,” Phillips said. “Earning rewards points on eligible categories like travel helps to lessen the impact of these large-dollar purchases.”
John Patton, senior payments advisor at Co-op, said inflation, supply-chain issues and war in Europe might sway consumers toward credit as a strategy “to hold on to cash for safety, while avoiding riskier investments like cryptocurrencies.”
Co-op’s February credit union spending data released Tuesday showed strong double-digit January-to-February increases in the travel merchant category for both debit and credit. PSCU found travel rose 112% by credit and 43% by debit from February 2021 to February 2022.
“Our February spending data shows that consumers started making their last-minute travel plans for the spring once concerns with the Omicron variant started to dissipate,” Phillips said.
PSCU found growth in dollars faster than growth in the number of transactions in the past 12 months. As a result, the average purchase amount continued to increase. For February, the average credit purchase was $72.38, up 5.8% compared to February 2021, while the average debit purchase rose 3.9% to $45.58.
PSCU fount the credit card delinquency rate was 1.56% in February, up from 1.51% in February 2021 and down from the pre-pandemic level of 1.94% in February 2019. “The continued strong growth in credit purchases over the past three months contributed to the slight rise in delinquencies after 18 months of reductions,” PSCU’s report said.
PSCU’s February Payments Index released Tuesday was based on data from credit unions that have been processing payments with PSCU since January 2020. It encompassed 2.6 billion transactions valued at $130 billion of credit and debit card activity in the 12 months ending Feb. 28.