Credit union members are paying much more for gasoline, groceries and restaurant meals than a year ago with inflation becoming a growing contributor, according to reports from payments CUSOs.
PSCU’s Payments Index released June 16 showed members whose credit unions use PSCU services spent 15% more by credit card and 6% more by debit in May than they did in May 2021.
The changes bracketed the 11.7% gain reported by the Census Bureau June 15 for retail spending in May, excluding vehicles and auto parts.
PSCU’s numbers reflected a shift from debit to credit with the debit gains smaller than Census figures and the credit gains larger.
Co-op Solutions of Rancho Cucamonga, Calif., also reported strong one-month spending gains across most categories among members at credit unions in its network.
Beth Phillips, director at Co-op Solutions, said May’s data shows a continuation of the year-long shift away from debit spending to credit.
“Debit card users are pulling back on spend, possibly moving to credit for smaller, everyday purchases, while, reserving their cash available for larger purchases, like home improvement, or to keep it on hand due to economic conditions,” Phillips said.
Brian Caldarelli, PSCU’s EVP and CFO, said overall consumer spending growth remained strong throughout May 2022, with gasoline showing the top growth rates in both credit and debit as fuel prices remain elevated.
“The Consumer Price Index increased this month as we continue to face the highest level of inflation in more than 40 years,” Caldarelli said. “While the Federal Reserve announced another rate increase this week, a pause in the series of aggressive rate hikes is unlikely until inflation returns to an acceptable level.”
By segment, Census and PSCU reported the following 12-month gains in May:
- Gasoline spending rose 43.5%, according to Census. PSCU reported gains of 54% by credit and 32% by debit.
- Grocery spending rose 7.9%, according to Census. PSCU reported a gain of 15% by credit and 5% by debit.
- Restaurant spending rose 16.8%, according to Census. PSCU reported gains of 26% by credit and 8% by debit.
The PSCU report found a “notable lift in restaurants as consumers continued to return to dining outside the home, which comes at the expense of less growth in the grocery store sector.”
Average credit card account balances among PSCU-affiliated members finished May 2022 at $2,724, up 2.9% compared to May 2021. This was the third consecutive month in which year-over-year growth in balances was greater than 2%. Average credit card account balances were down 5.5%, or $157, from May 2021.
“As consumers have less liquidity, we see a return to a greater reliance on credit activity as the market deals with persistently high inflation,” the PSCU report said. “After a period of tangible credit card balance paydowns, we could see growth in balances from more recent bigger-ticket travel and entertainment sector purchases.”
Co-op Solutions’s June 15 report also showed credit balances have increased steadily since the beginning of 2022 on a year-ago basis. May 2022 showed the strongest growth trend yet, with 8.1% higher balances as compared with May 2021 and a lift of nearly 1% over April 2022.
The Fed’s G-19 Consumer Credit Report released June 7 showed the amount of credit card debt held by both banks and credit unions in April continued to inch closer to the level of February 2020, the month before COVID-19 was declared a pandemic and credit card debt began to plummet.
Credit unions held $64.7 billion in credit card debt in April, up 10.8% from a year earlier, but still 0.9% below February 2020. Banks were just 0.2% below February 2020.
PSCU’s February Payments Index was based on data from credit unions that have been processing payments with PSCU since January 2020. It encompassed 2.7 billion transactions valued at $137 billion of credit and debit card activity in the 12 months ending May 31.
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