PSCU Payments Index – December edition
ST. PETERSBURG, FL (December 15, 2021) — Today, PSCU – the nation’s premier payments credit union service organization (CUSO) – published the December edition of the PSCU Payments Index, the goal of which is to provide information and insights to help financial institutions make informed, strategic decisions on the road ahead.
In this month’s iteration, we see that strong consumer purchasing continued through the peak of the holiday shopping season, with mixed results among the larger retailers amidst a shifting tone from the Fed on inflation. Following an increase in October, the Consumer Confidence Index decreased in November – affected by rising prices, job and income prospects. This month, we present the second in a three-part Deep Dive into 2021 Holiday Spending.
“Leveraging PSCU’s Member Insight, we have seen a strong year-over-year rebound in fourth-quarter spending on both an aggregate and per-card basis, with spending higher than pre-COVID 2019 levels. In line with the findings of the Payments Index, we have seen higher Black Friday and Cyber Monday purchase activity this year – as well as increased spend in categories that were negatively impacted by COVID-19, like restaurants, hotels and airlines,” said Joe Lovasz, Vice President, Products & Payments at Virginia Credit Union. “At Virginia Credit Union, we annually run a balance transfer campaign with promotional pricing in the fourth quarter and we’ve seen a strong member response, with a notable increase in balance transfer activity, this year. While members are spending again, payments remain steady, suggesting that personal balance sheets are overall in a good place.”
A sampling of key takeaways from the December report includes:
- Consumer spending remained strong for both credit and debit purchases, with growth in credit outpacing debit as we get further from the many government COVID-19 relief programs that ended in late summer.
- As observed in Part II of our Deep Dive on 2021 Holiday Spending, Goods sector purchases remained strong, with credit up 14.9% and debit up 10.5% for the month of November. This builds on the solid start to the holiday shopping season in October, in which credit was up 13.6% and debit was up 9.5%. Over the two-month holiday period thus far, consumers have notably resumed in-person shopping, with Goods sector Card Present credit purchases up 20% compared to 2020.
- Fed Chief Jerome Powell is no longer using the term “transitory” to describe inflation, which could signal a change to tighten monetary policy – and that higher interest rates could be on the horizon. Inflation increased again, as the CPI-U for November rose to 6.8%, the largest yearly increase in 39 years.
- The average amount of balance transfers has increased to $3,179 in November from the lowest point in August 2021, up 2.4%. The rate of usage among active accounts has returned to a pre-pandemic cycle and is expected to seasonally peak in the first quarter of each year, with March as the high point.
- The overall credit card delinquency rate is now 53 basis points lower than 2019 results for November, finishing at 1.43%.
- While the unemployment rate fell to 4.2% in November with 210,000 jobs added, this was much lower than the 550,000 jobs that were expected to be added. Sourcing employees and job creation continue to be a concern.
As new uncertainties of COVID-19 variants and what has become the longer-term impacts of inflation on the recovering economy materialize, the PSCU Payments Index continues to evolve. We continue to focus more on year-over-year changes and fewer comparisons to pre-pandemic 2019.
The full report is available for download here or can be shared as a PDF upon request. Additionally, feel free to subscribe here to receive updates when the PSCU Payments Index is published each month.
About PSCU
PSCU/Co-op Solutions is the nation’s premier payments credit union service organization (CUSO) and an integrated financial technology solutions provider. With over four decades of industry experience and a commitment to service excellence and innovation, the company serves more than 4,000 financial institutions throughout North America. PSCU/Co-op Solutions leverages its expertise and resources on behalf of credit unions and their members, offering an end-to-end product portfolio that includes payment processing, fraud and risk management, data and analytics, digital banking, instant payments, strategic consulting, collections, ATM and POS networks, shared branching and 24/7/365 member support via its contact centers. For more information, visit pscu.com and coop.org.
