PSCU: Holiday Spending Lags Inflation
The payments CUSO reports average credit card balances set a new record, as delinquencies rise.
Credit union members continued holding back on credit card spending during the holidays through the nation’s largest payments CUSO, while increasing their purchases by debit card.
Neither measure surpassed the nation’s inflation rate.
PSCU of St. Petersburg, Fla., reported the credit card delinquency rate among affiliated members surpassed 2.5%, up from a high of 2.46% in November and up by 55 basis points from a year earlier — its largest 12-month increase in 2023.
PSCU’s Payments Index report released Jan. 17 showed its average credit card balance reached a five-year high of $3,095 in December, surpassing the pre-pandemic 2019 average for the third consecutive month. The November balance rose by $178, or 6.1%, from a year earlier, and rose $39, or 1.3%, from November.
PSCU’s total credit card balances grew 8% year over year in December 2023 and 1.4% from November.
PSCU reported spending in December rose 0.7% by credit and rose 4.9% by debit from year-ago levels. That compares with the nation’s 3.4% unadjusted gain in retail spending, excluding automobiles and parts, reported Jan. 18 by the Census Bureau.
The unadjusted gain in spending reported by Census matches 3.4% gain in the Consumer Price Index (CPI) from December 2022 to December 2023.
PSCU reported spending during the October-December holiday period fell 1.2% for credit cards while rising 2.7% for debit.
For all consumers, Census reported unadjusted retail spending, excluding automobiles and parts, for October through December rose 1.8% from a year earlier.
Julie Conroy, chief insights officer for the Datos Insights consulting company, said consumer holiday spending increased year over year, buoyed by holiday sales starting earlier than ever.
“Amid the economic uncertainty that marked 2023, we saw retailers pull out all the stops to lure shoppers in throughout the holiday season, leveraging innovative new techniques – including augmented reality, TikTok purchases, and even a 23-part holiday romantic comedy from Walmart with purchase opportunities broadcast via social media channels,” Conroy said.
Similar categories in the Census retail spending report and PSCU’s Payment Index showed:
- Grocery store spending rose 0.6% in December from a year earlier, Census reported. At PSCU, spending rose 1% by credit and rose 3% by debit.
- Gasoline spending fell 7.7% in December from a year earlier, Census reported. At PSCU, spending fell 2% by credit and fell 2% by debit.
- Spending at restaurants and bars rose 10.8% in December from a year earlier, Census reported. At PSCU, spending rose 8% by both credit and debit.
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 $148 billion of credit and debit card activity in the 12 months ending Dec. 31.
Census reported seasonally adjusted retail sales in December rose 0.6% from November and 5.6% from December 2022.