National Numbers Show A Drop In Credit Card Spending
August 6, 2020
New York was known as a hotspot for the COVID-19 pandemic in March and April when the coronavirus first hit the United States hard. Now it’s an ongoing hot zone for a huge drop in credit card spending.
The weekly PSCU analysis of transaction trends, as reported by the Credit Union Times, shows the debit spend was up almost 15% and credit spend had dropped about 7% in the first eight states to be dubbed “hot zones,” or virus epicenters, during the COVID-19 pandemic. They included New York, Connecticut, New Jersey, Illinois, California, Michigan, Louisiana and Washington, D.C., which are still seeing a contraction in overall spending compared to the rest of the nation, according to the report.
The 10 newest “hot zones,” however, haven’t deviated much from the U.S. performance as a whole, as they saw debit spend rise more than 10% and credit spend has dropped 5%. Those states included Alabama, Arizona, Florida, Georgia, Texas and South Carolina.
As for the eight states that never issued formal “stay-at-home” orders, PSCU found they’ve experienced less growth than the rest of the country for the past four weeks. Those states were Iowa, Arkansas, North Dakota, South Dakota, Nebraska, Oklahoma, Utah and Wyoming.
The report revealed some interesting trends, according to Glynn Frechette, senior vice president of Advisors Plus at PSCU. “While overall payment volume was down slightly once again, consumer spending remains positive and relatively unchanged for the week,” Frechette said.
Overall card payment volumes have continued to drop slightly, while spending in the U.S. rose about 16% for debit and fell 3% for credit. Meanwhile, consumers are using less cash than they were this time last year, instead opting for contactless and card-not-present payments.
Consumers are significantly more likely to make debit transactions with mobile wallets such as Apple Pay, Fitbit Pay and Google Pay than they were in 2019 — 81% more likely, to be exact. Likewise, credit union mobile wallet transactions rose more than 47%.
ATMs also saw about 20% fewer cash withdrawals this year, continuing the trend of recent weeks.
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