By Roy Urrico
Growth in consumer card spending improved in October, with increases for both debit and credit, while lower gasoline prices continued to negatively impact purchase growth as gas transactions remained flat. These are some of the findings in Nov. 2024 edition of the Velera Payments Index, which also featured the first of a three-part “Deep Dive” on holiday spending.
St. Petersburg, Fla.-based Velera – formerly PSCU/Co-op Solutions – which describes itself as the nation’s premier payments CUSO and an integrated financial technology solutions provider – designed the Velera Payments Index to help credit unions and other financial institutions make strategic, data-informed decisions on behalf of their members and customers.
Key Takeaways
The number of available jobs remained essentially the same for October, with slight increases in healthcare and government. The U.S. Bureau of Labor Statistics (BLS) reported the overall unemployment rate also remained the same for October at 4.1%, or 6.8 million people. The Consumer Confidence Index recorded its strongest monthly gain since March 2021 with an increase to 108.7 in October from 99.2 in September.
Multiple survey measurements marked improvements in consumer confidence, though job growth remains depressed. The 12-month the Consumer Price Index (CPI) through October increased by 2.6%, up 0.2% from September 2024. “While economic and sentiment indicators are favorable, an anticipated December interest rate cut remains on the horizon as borrowing costs remain high,” said the report.
The sectors with the greatest year-over-year growth for credit purchases continued to be services (+7%) and transportation (+4%). “However, when comparing year-over-year sector growth rates, services softened by two percentage points and transportation by seven percentage points. Additionally, the majority of the sectors were down considerably. Most notably, travel softened by 10 percentage points, entertainment by eight, and restaurants by seven.
On the debit side, money services (+17%), services (+11%) and entertainment (+8%) were the sectors with the highest growth rates in October. Comparing the January-October 2024 period to the same period in 2023, money services grew two percentage points and services one point, while entertainment softened by one point. The most significant decreases among all the sectors included travel and transportation, which were down nine and six points, respectively.
The average purchase amount per transaction for the gasoline sector in October decreased 10.1%, or $3.48, year-overyear for credit and 6.8%, or $1.67, for debit. The national average price per gallon of gasoline finished at $3.05 for the week ending Nov. 11, down 8.9% or $0.30 year-over-year.
Holiday Season Begins
The first in the three-part Deep Dive on holiday spending focused on the October sales events at large retailers: Amazon, Target and Walmart. All three posted positive growth in debit card activity, while only Target posted positive growth in credit cards. For the month of October, the overall goods sector posted strong year-over-year growth, up 5.5% in credit purchases and 5.7% in debit purchases.
“As the holidays rapidly approach, there are a variety of growth estimates for this year’s holiday shopping period,” said the Velera Payments Index. “Adobe is forecasting consumer spending will be up 8.4% this holiday season, totaling $241 billion. In a more conservative estimate, the National Retail Federation (NRF) is forecasting 2024 annual sales will grow between 2.5% to 3.5%.”
What Should Credit Unions Do Now?
"At Community First Credit Union, we implement an annual holiday spend campaign, which runs from Thanksgiving through Giving Tuesday. Evolving over the past decade to align with members’ changing shopping habits, we have also expanded our Great Rewards credit card bonus, which offers 3x points to boost cardholder spending and has resulted in a strong ROI increase,” said Angela Skrobutanas, vice president, product marketing at Community First Credit Union ($5.9 billion; Neenah, Wis.).
Skrobutanas continued, “In recent years, we have emphasized Small Business Saturday and Giving Tuesday to align with our members’ values and support our local community. This year's 'Season of Smiles' theme encourages spreading joy while earning rewards, with 3x points on Great Rewards and 3% cashback on our new Cash Back Visa Signature. Our aim is to support meaningful purchases and strengthen member engagement."
Velera also recommended:
New accounts play a key role in credit and debit portfolio performance – and the new year is the ideal time to focus on acquisition strategies. For debit, targeting new checking accounts via a checking acquisition program is a valuable growth strategy. “Additionally, credit unions can explore a variety of custom and turnkey credit card account acquisition marketing campaigns. January campaign enrollment deadlines are approaching for spring campaign launches.”
In conjunction with credit and debit account acquisition initiatives, new account onboarding journey campaigns are essential to increase member engagement and build loyalty. Early and ongoing messages can help drive card activation and first use – critical checkpoints to establish and maintain top-of-wallet status.
As credit card delinquencies remain elevated and tend to rise during the holiday season, consider resources to assist or supplement your credit union’s collection activities. Velera’s TriVerity offers a variety of first-and third-party services.
A balance transfer campaign is an essential credit card marketing strategy. “As an example, Velera Consulting transfer campaigns showed an average responder amount of more than $6,500. Now is the time to begin planning a spring marketing campaign, as peak usage for balance transfer checks typically occurs in March,” the report noted. “Deadline for enrollment is Dec. 15.”