Credit scores and consumer spending habits have changed since the beginning of—and even throughout—the COVID-19 pandemic. FICO scores are up, credit card balances and delinquencies are down, and many consumers are refinancing or paying down debt thanks to low interest rates, stimulus money, and assistance programs.
A transmissible virus has made credit cards and digital payments more appealing while the use of cash has dropped significantly. According to PEW, about 3 in 10 Americans said they make no purchases with cash in a typical week. Over the past decade online shopping has steadily been increasing and now represents over 13% of total retail sales. This trend is expected to continue further pushing credit card usage over cash.
As we head into the holiday shopping season, access to credit will become a factor in consumer spending. Deloitte, KPMG, and other analysts expect 2021 holiday season retail sales to increase between 7% to 9% compared to 2020—almost double the retail industry’s historical annual growth rate.
While it is important for credit unions to continue to attract new credit card customers, it is also important to keep the ones you have. Acquiring a new member costs anywhere from five to 25 times more than retaining an existing one. There can be additional value in extending credit lines to the members with existing credit card accounts proactively to keep your card top of wallet.
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