The Velera Payments Index November 2024: A Deep Dive into Holiday Spend — Part I

Since our last Payments Index update, the U.S. presidential election concluded Nov. 5 with a decisive winner, the Federal Reserve cut interest rates by a quarter-percent on Nov. 7 and the 2024 holiday shopping season officially kicked off with the start-of-season sales in early October. Growth in consumer card spending improved in October, with increases for both debit and credit, while lower gasoline prices continued to negatively impact purchase growth as growth in gas transactions remained flat. In this edition of the Velera Payments Index, we present the first of our three-part installment on holiday spending.

Key takeaways include:

• For October, year-over-year growth rates improved. Debit purchases were up 5.1%, while credit purchases were up 0.7%. Debit transactions were up 3.7% and credit transactions were up 1.7%. The Service and Goods sectors contributed to this positive growth, while lower gasoline prices contributed to small declines in purchases. Money Services continued to be the largest contributor to the growth in debit purchases, accounting for 1.8% of the 5.1% year-over-year increase.
• Multiple survey measurements reported marked improvements in consumer confidence, though job growth remains depressed. The 12-month CPI through October increased by 2.6%, up 0.2% from September. While economic and sentiment indicators are favorable, an anticipated December interest rate cut remains on the horizon as borrowing costs remain high.
• The 2024 holiday shopping season officially kicked off in October, with major retailers holding start-of-season sales events. Amazon, Target and Walmart all posted positive growth in debit card activity, while only Target posted positive growth in credit cards. For the month of October, the overall Goods sector posted strong year-over-year growth, up 5.5% in credit purchases and 5.7% in debit purchases.

What should credit unions do now?

• New accounts play a key role in credit and debit portfolio performance – and the new year is the ideal time to focus on acquisition strategies. For debit, targeting new checking accounts via a checking acquisition program is a valuable growth strategy. Additionally, credit unions can explore a variety of custom and turnkey credit card account acquisition marketing campaigns. January campaign enrollment deadlines are approaching for spring campaign launches.
• In conjunction with credit and debit account acquisition initiatives, new account onboarding journey campaigns are essential to increase member engagement and build loyalty. Early and ongoing messages can help drive card activation and first use – critical checkpoints to establish and maintain top-of-wallet status.
• As 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.
• A balance transfer campaign is an essential credit card marketing strategy. As an example, Velera Consulting transfer campaigns showed an average responder amount of more than $6,500. Now is the time to begin planning a spring marketing campaign, as peak usage for balance transfer checks typically occurs in March. Deadline for enrollment is Dec. 15.

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