By: Velera 

In the December edition of the Velera Payments Index, we see that consumers spent record amounts online this year during the five-day shopping period from Thanksgiving through Cyber Monday. In the second of our three-part installment on holiday spending, we detail results from the peak five-day shopping period (Nov. 28 through Dec. 2) and the month of November.

Consumer sentiment showed continued optimism, especially for consumers under the age of 35, as the Consumer Confidence Index increased to 111.7 in November from 109.6 in October. The increases come from positive consumer assessments and greater optimism on future job availability. Jobs grew by 227,000 in November, with increases in healthcare, leisure and hospitality, government and social assistance. The U.S. Bureau of Labor Statistics (BLS) reported the overall unemployment rate slightly increased for November to 4.2%, or 7.1 million people. 

Key Takeaways

Key takeaways from the December 2024 edition of the Payments Index include:

• As consumers spent record amounts online from Thanksgiving Day through Cyber Monday (Nov. 28 through Dec. 2), overall debit purchases were up 22.3% and Goods sector debit purchases were up 11.1% within the Payments Index data for this intensive five-day spending period. Overall credit purchases were up 9.0% and Goods sector credit purchases were up 2.6%. 
   
• For the month of November, year-over-year growth rates were mixed, impacted by the 2024 Thanksgiving holiday and subsequent peak shopping days occurring five days later than in 2023. However, any appearance of softening in growth will likely be picked up in December, which includes a record Cyber Monday. Debit purchases were up 6.2%, while credit purchases were down 2.1% in November. Debit transactions were up 4.5% and credit transactions were up 0.4%.
   
• For credit, the Goods sector had the biggest impact to the year-over-year decline. For debit, Money Services continued to be the largest contributor to the growth in debit purchases, accounting for 2.0% of the 6.2% year-over-year increase. 
   
• The 12-month CPI through November increased by 2.7%, up 0.1% from October. Consumer sentiment indicators remain favorable, as the final 2024 Federal Open Market Committee (FOMC) meeting concluded on Dec. 18 with a quarter percentage point reduction.
   
• With two-thirds of the 2024 holiday shopping season reported, growth in Goods sector debit purchases remained comfortably positive, up 4.8%, while growth in Goods sector credit purchases was down 2.2% for the cumulative shopping season through November. Of our tracked major retailers, all were positive for growth in debit purchases and negative for growth in credit card purchases. Amazon had the strongest growth for debit purchases, up 4.2%, and Walmart had the strongest growth in credit purchases, down 0.7% for November.

Checking in: Charitable and Social Organizations

Payment activity rose in the Charitable and Social Organizations merchant category as Giving Tuesday fell on Dec. 3 this year. Growth in purchases was up 31.2% for debit and 11.3% for credit on Giving Tuesday as compared to 2023. When data from Giving Tuesday was compared to 2023, the average credit purchase amount was $116.81, up 11.0% and the average debit purchase amount was $69.78, up 7.8%. Year-over-year growth in purchases for this merchant category for the cumulative calendar year through November was up 8.0% for debit and up 4.4% for credit. The strong year-to-date growth was influenced by notable increases in the months of September and October 2024, which aligned with the aftermath of two major hurricanes — Helene and Milton. 

What Should Credit Unions Do Now? 

• Some consumers will take time to pay off credit card balances after the holidays, resulting in higher-than average utilization levels in the beginning of the year. Assess credit-worthy credit card members for a credit line increase in early 2025, enabling additional purchasing power throughout the year, as well as room for post-holiday balance transfers. 
   
• The perfect time to focus on credit and debit card retention efforts is when consumer spending starts to ramp up following the post-holiday lag. Encourage member re-engagement. Don’t miss out on the Advisors Plus Spring 2025 Activation & Retention campaign launching April 1. The enrollment deadline is Jan. 15. 
   
• 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. 

Looking Ahead

Fed Chair Jerome Powell said the Fed can be more cautious in 2025 given the strength of the U.S. economy, citing that consumers are feeling the effect of high prices, rather than of high inflation. However, inflation will likely be a thorny issue for President-elect Trump with potential across-the-board tariffs on the horizon. 

We will report on the rush of final spending days during the last month of holiday shopping in the January edition of the Velera Payments Index.