The Velera Payments Index March 2025: A Deep Dive into Delinquencies

Amidst an increasingly volatile political climate, consumer sentiment began waning in February 2025 on concerns of anticipated inflation increases, with impacts seen across all income levels within the U.S. economy. While growth in purchasing activity remained positive, February year-over-year results softened for both credit and debit activity. In the March 2025 edition of the Velera Payments Index, we revisit Delinquencies and examine differences by generations and credit scores.

Key takeaways include:

• Growth rates softened for credit and debit in February. On an adjusted basis (to account for the leap year in 2024), credit purchases were up 0.5% and debit purchases were up 5.7%. Credit transactions were up 0.7% and debit transactions were up 2.3%. Unadjusted (with one extra day in February 2024), credit purchases were down 3.4% and debit purchases were up 1.4%.
• Money Services maintained its position as the top contributor to growth in debit purchases, accounting for one-third of the year-over-year increase. The Goods and Services sectors represented the second- and third-largest impact for debit, respectively. For credit purchases, the Services sector was the largest contributor to growth for February. Within Services, insurance sales/premiums were the top merchant category.
• The 12-month CPI through February increased by 2.8%, down 0.2% from January. The Shelter index accounted for almost half of the overall increase and was up 0.3%. Core inflation, now at 3.1%, was up 0.2% for February. It’s unlikely there will be an interest rate change by the Fed on March 19, with the next opportunity for a change coming May 7.
• Delinquencies rose after bottoming out in May 2021 at 1.03% but have remained stable since our last delinquency Deep Dive (February 2024). Overall credit card delinquencies for February 2025 were 2.49%, down 0.11% year over year. However, we also saw higher delinquency rates within the younger age demographics, as seen in the notable increase for the youngest generational segment (Gen Alpha), up 17% year over year to 4.96% for February 2025.

What should credit unions do now?

• Enhance delinquency management tactics. Leverage advanced technologies and multi-channel communications options to engage cardholders in their preferred channels.
• Revisit fraud strategies with an omnichannel perspective. Before an attack happens is the best time to evaluate whether your fraud and risk mitigation portfolio is keeping pace with the expanding fraud landscape.
• Plan for summertime card marketing campaigns.
• Increase promotion of financial literacy, specifically for younger members, given the observed higher delinquency rates and propensity for utilizing BNPL.

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