CUSOs Find Member Spending Rose in January

Retail spending handled by the nation’s two largest payments CUSOs rose in January, but they signaled worries about a downturn ahead.

The Census Bureau reported earlier this month that January retail spending, excluding automobiles and parts, rose 7.6% from a year earlier.

PSCU, based in St. Petersburg, Fla., reported January spending rose 9% by credit and 7% by debit compared with a year earlier.

Co-op Solutions of Rancho Cucamonga, Calif., released its Payment Trends Report Thursday, which showed weaker 12-month spending gains: Up 3.6% for credit and up 6.7% for debit.

Members using both CUSOs continued to increase the amount of their spending at a faster rate than the number of transactions, reflecting the continued effects of inflation.

The PSCU Payments Index report released Feb. 16 showed total credit card balances among PSCU-affiliated members were up 13.7% for January compared to a year earlier.

Average credit card account balances among members using PSCU were $2,912 on Jan. 31, up $176, or 6.4%, from a year earlier and “down only $5 from the December 2022 average,” the report said. “The January 2023 average was well above the averages for January 2022 and 2021, but still below 2020 and 2019 figures.”

PSCU found the credit card delinquency rate for January was 1.97%, returning to 2019 pre-pandemic levels, but up from 1.51% in January 2022.

Co-op said credit unions are watching delinquencies and charge-offs closely. “In light of the Fed’s continued interest rate hikes and escalating economic stressors, charge-off rates are once again rising from the historic lows of the past few years — with predicted loss rates on par with those seen before the pandemic,” its report said.

John Patton, senior payments advisor at Co-op Solutions, said higher income households — including those professionals that receive a regular salary — are still faring better than lower-income, paycheck-to-paycheck households.

“But the latest surge in job growth has skewed toward lower-wage jobs in the leisure, hospitality and health care sectors, indicating that the professional ranks may begin feeling the pain soon as consumer confidence continues to decline,” he said.

Comparisons of spending categories from the reports included:

• Grocery store spending, which rose 5.8% in January from a year earlier, Census reported. At PSCU, spending rose 9% by credit and rose 7% by debit. At Co-op, spending rose 2.2% by credit and rose 3.9% by debit from a year earlier.
• Gasoline spending, which rose 5.1% in January from a year earlier, Census reported. At PSCU, spending rose 12% by credit and fell 0.2% by debit. At Co-op, spending rose 0.7% by credit and rose 2.5% by debit from a year earlier.
• Department store spending, which rose 3.1% in January from a year earlier, Census reported. At Co-op, spending fell 2.1% by credit and fell 0.7% by debit from a year earlier.
• Spending at restaurants and bars, which rose 24% in January from a year earlier, Census reported. At PSCU, spending rose 12% by credit and rose 4% by debit. At Co-op, spending rose 9.8% by credit and rose 14.3% by debit from a year earlier.

The PSCU Payments Index was based on data from credit unions that have been processing payments with PSCU since January 2021. It encompassed 2.9 billion transactions valued at $146 billion of credit and debit card activity in the 12 months ending Jan. 31.