PSCU Payments Index October 2023: Discretionary Spending
Consumer payment behavior remained positive for both credit and debit in the October 2023 edition of the PSCU Payments Index despite a drop in consumer sentiment for September, while the 12-month rate of inflation remained unchanged. This month’s Deep Dive investigates discretionary spending trends in September results.
Key takeaways include:
- Consumer purchases maintained their consistent and positive trends in September, although were down from the prior-month growth. Year-over-year growth in debit purchases was up 5.6%, while credit purchases were up 1.4%. Transaction growth finished with debit up 4.6% and credit up 2.6% for the month.
- For credit and debit purchases in September, the largest contributor to growth was again the Services sector. Goods and Utilities were the only categories offsetting credit purchase growth, contributing to a 0.6% and 0.1% reduction, respectively. For debit purchases, all sectors contributed positively to year-over-year growth.
- The CPI-U increased by 0.4% in September, while the 12-month rate of inflation remained unchanged at 3.7%. Shelter accounted for more than half of the monthly increase in September. Excluding the volatile Energy and Food sectors, the core CPI index increased 0.3% again in September.
- Growth in discretionary spending remained strong in September, with debit purchases up 6.2% and credit purchases up 1.8%. Two-thirds of the growth in debit discretionary purchases came from the Entertainment sector – Online Gambling and Events (concerts). For credit discretionary purchases, Events (concerts) and Cruises were top contributors.
- The average credit card balance for active accounts exceeded $3,000 for the first time since February 2020, finishing August at $3,003, up 8.0% (or $223) year over year. Growth in BNPL-related payments were strong when looking at the top providers, including Affirm, Afterpay, Klarna, PayPal (Pay In 4) and Sezzle. For September 2023, BNPL debit payments were up 28.0%.
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