ST. PETERSBURG, Fla.—Despite consumer spending slowing to some of its weakest rates of 2024, payments remained steady last month, Velera is reporting.
“Despite a slowdown in overall spending growth, consumers in our Payments Index data set maintained steady year-over-year purchase volumes during a successful Amazon Prime Day sale, which saw a 12% overall increase year over year, driven by discounts and continued adoption of BNPL. Prime Day highlights Amazon's integral role in consumers' lives, and the growth in July's performance indicates our credit unions have effectively positioned their cards in members' wallets,” Ryan Myers, senior vice president, Consulting at Velera, said in a statement. “As we approach the holiday shopping season and Amazon’s next big sale – Prime Big Deal Days in October – credit unions should stay vigilant with competitive card products and marketing to minimize the impact of growing BNPL purchases.”
Key Takeaways
According to Velera, key takeaways for July include:
- For July, year-over-year growth rates continued to soften for debit and credit, with credit virtually flat year over year and debit up marginally. While debit purchases were up 3.2%, half of the debit growth came from Money Services (CashApp, Venmo, Zelle, etc.). Credit purchases were up 0.2%, with the Service sector keeping growth in positive territory. Debit transactions were up 1.6% and credit transactions were up 0.8% year over year.
- The Consumer Price Index (CPI-U) declined in July, bringing the 12-month rate of inflation to 2.9% – the smallest 12-month increase since March 2021. Reductions were seen in used cars and trucks, medical care, airline fares and apparel. Shelter, which rose 0.4 percent in July, accounted for 90% of the monthly increase. The energy index, which includes gasoline, was unchanged after two months of declines.
- Despite slowing consumer spending, Payments Index data shows positive growth in credit and debit purchases for the Amazon Prime Day event on July 16-17. Target and Walmart both held their competing events during the full week prior to Amazon’s event, with each retailer also posting positive growth in purchases.
- The 2024 credit card delinquency rate remains elevated compared to the past few years, as well as when compared to the pre-pandemic patterns of 2019. While the seasonal pattern of increasing as the end of the year approaches is apparent, the July delinquency rate was up 45 basis points compared to July 2023.
- Growth in year-over-year total credit card balances was up 4.9% for July. While total balances continue to increase, the rate of growth is slowing with July being the low point for 2024 so far.
The full report is available for download here.