Consumers Turn Again to Credit Cards

by Mercator Advisory Group 0

First Data’s SpendTrend data for June suggest consumers are increasingly turning to credit card use, in large part due to inflation in general, and gas prices specifically.

The dollar volume of purchases paid with plastic rose 10.7 percent in June from a year ago, while the transaction numbers jumped 6.8 percent, according to FirstData Corp.’s SpendTrend report.

Silvio Tavares, FirstData senior vice president, attributes the increase to pump prices. “Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,” he said. “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem

This reading is directionally consistent with the Fed’s G19 reading of revolving credit outstanding for May, which was up 5.1%. What is unclear at this time is whether or not increased credit card spending will translate into balances which will ultimately revolve and create interest income for issuers.

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