Credit, debit volumes getting better, but travel spending still lags
The long Independence Day weekend wasn’t enough to boost travel spending, according to new analysis from CO-OP Financial Services and PSCU.
The payments firm PSCU reported travel-related purchases were down about 28% for debit cards and 58% for credit cards in the week ending July 5, compared with the week ending July 7, 2019. Air travel was hit even harder. Consumer spending for airline travel shrank 59% year over year for debit and 71% for credit, CO-OP found.
“While it may be summer-vacation time, members aren’t ready to travel by airplane just yet,” CO-OP noted in a press release. “As airlines begin offering more flights, it will be interesting to see if spending on air travel increases accordingly.”
To make matters worse, some states – notably California and Texas – had reimposed lockdown measures, while others have pause the reopening process amid a resurgence of the outbreak. New York, New Jersey and Connecticut all now require travelers from certain states to self-quarantine for 14 days upon arrival.
The credit union industry has felt this as well. Along with the loss of revenue that CUs gain from hotel and travel reservations purchases with credit union-issued plastic, the industry has largely curtailed business travel since the pandemic broke wide in March. A new study from the Global Business Travel Association shows many firms’ business travel has been significantly restricted, and nearly the entire credit union conference line-up for the spring and summer has been cancelled or shifted to a virtual environment, altering many industry leaders’ traditional summer travel plans.
The gloomy air travel trend could benefit car rentals. Debit card purchases at car rental agencies grew about 6% in June, according to CO-OP, which suggested long-distance car trips could regain their popularity in the wake of the pandemic.
Overall consumer spending continues to show improvements. Debit card spending increased nearly 20% in the week of Fourth of July, according to new data from PSCU. Credit card spending fell about 1% but remains on track for recovery. None of the country’s four new coronavirus hot spots – Texas, Florida, Arizona and California – outperformed the nationwide average in either debit or credit card purchases.