Data dump: Major issuers reported card spending recovery in Q2—a turning point in the fight against the pandemic.
How we got here: In June, US unemployment stood at 5.9%—down from April 2020’s 14.8% peak but still well above the 3.5% seen before the pandemic. Getting consumers back to work improved their financial well-being and willingness to spend on cards. This is reflected in data from PSCU, a national credit union payments organization: In June, spending on credit cards grew 32% YoY and 26% Yo2Y.
State reopenings and easing pandemic restrictions also let consumers do things outside their homes, opening up increased spending opportunities: Credit card spending on entertainment exploded 197% YoY and ticked up 2% Yo2Y in May, per PSCU.
What’s next? To maximize growth, issuers will likely launch card products that cater to consumer trends—like flexible rewards, as Citi did with its Custom Cash Card. Others may also dip back into travel and entertainment rewards, considering consumers’ eagerness to travel—78% of global consumers want to travel in 2021, per an American Express survey.
More issuers may also explore initiatives to expand credit access as consumers regain their appetite for credit cards. JPMorgan and Wells Fargo recently joined a government-backed plan in which issuers share customers’ account deposit data to determine consumer creditworthiness without using credit scores—expanding the pool of eligible cardholders.