The Velera Payments Index July 2024: A Deep Dive into Travel

Our July 2024 edition of the Velera Payments Index reveals consumer debit spending growth in June remained positive, while credit spending continued to slow. Economic indicators and the Federal Reserve Chair hinted to a possible rate decrease in the fall, while the 12-month rate of inflation dropped to 3%, in line with where it was one year ago. We also revisit a Deep Dive into Travel, a discretionary spending activity that boomed in the post-pandemic era that now shows signs of moderation.

Key takeaways include:

• For June – much like the prior month – growth rates improved for debit and softened for credit year over year. Debit purchases were up 4.3%, with almost a third of the debit growth coming from Money Services, while credit purchases were down 1.5%, with over half of the decrease in the Goods sector. Debit transactions were up 3.3% and credit transactions were up 1.1% year over year.
• The Consumer Price Index (CPI-U) dropped more than expected in June, with the 12-month rate of inflation now at 3%. Gasoline was the largest contributor to the decline, followed by airline fares and used cars and trucks. Increasing in June were shelter, motor vehicle insurance and household furnishings. Excluding the volatile Energy and Food sectors, the 12-month core CPI index was 3.3%, the smallest increase since April 2021.
• Year-to-date growth in the Travel sector was down, with credit purchases down 3.5% and debit purchases down 1.0%. Most categories within the Travel sector were down, with the exception of Cruise Lines. Year-to-date through June, credit purchases were up 5.2% and debit purchases were up 6% compared to 2023.
• Growth in total credit card balances accelerated in June, with a year-over-year increase of 5.5%. For May, credit card balances grew 5.1% YoY. This marked the first month-over-month increase for this measure in the past 14 months.

What should credit unions do now?

• Understand changes in your members’ purchase behaviors. Since Travel represents approximately 10% of overall credit spend, reductions in travel may lead to reductions in overall spend. Consider focusing on growth in other categories, such as Dining, which is showing the strongest growth for credit.
• Many members accumulated card rewards during the strong spend periods following the pandemic. With household finances tightening, using these rewards for travel might prove beneficial. Where available, communicate the available travel options specifically to those who are holding point balances.
• Consider promoting debit for travel, given its performance. Whether being frugal for purchases or lacking credit availability, debit has become a viable alternative in the travel space. Also remind members of the safety and security of using a card for these purchases.

Subscribe to our mailing list to receive the Velera Payments Index delivered directly to your inbox each month!