PSCU Payments Index September 2023: A Deep Dive into Back-to-School Spending

The September 2023 edition of PSCU Payments Index reveals that although consumer sentiment erased gains from the past two months, actual consumer behavior remained steady for both credit and debit, even with a larger-than-expected inflationary increase for August. This month’s Deep Dive highlights the second largest annual spending event of back-to-school purchases for the month of August. For the first time in more than three years, federal student loans began interest accruals on Sept. 1, with payments set to resume in October — likely impacting disposable income for many beginning next month.

Key takeaways include:

• Consumer purchases remained buoyant in August. Debit maintained steady year-over-year growth, with purchase volumes up 5.8%, while credit purchases were up 1.9%. Transaction growth remained positive, with debit up 5.2% and credit up 3.3% for the month.
• For credit and debit purchases in August, the largest contributor to growth was the Services sector. Goods was the only notable category offsetting credit purchase growth, contributing to a 0.5% reduction. For debit purchases, all sectors contributed positively to year-over-year growth.
• The CPI-U increased by 0.6% in August, its largest monthly gain since June 2022. Energy prices rose 5.6% in August, including a 10.6% increase in gasoline prices, which fueled much of the overall CPI increase. Excluding the volatile energy and food sectors, core CPI increased 0.3%, slightly higher than estimates.
• In back-to-school merchant categories, purchase growth in debit, up 3.6%, aligned with the National Retail Federation (NRF) 2023 estimates of 3.0%. Year-over-year growth in back-to-school credit purchases was down 0.6%. Merchant categories representing larger retail merchants like Amazon, Walmart and Target posted stronger growth when compared to the overall back-to-school group.
• The credit card delinquency rate increased again in August and finished at 2.11%, above the August 2019 pre-pandemic level by 35 basis points. Total credit card balances were up 12.2% for August compared to a year ago. 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. 

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