Card Use Slows in Summer, Yet New Ways to Spend on Horizon

Consumer Credit Growth Slows

We always like when two seemingly unrelated bits of news emerge to make a pattern, or perhaps two points on a related map. On the one hand, we have another report from the Fed that, as Reuters puts it, “growth in U.S. consumer credit Trends slowed for the second straight month in July, held back by a decline in a measure of credit card usage that hinted at a mood of caution among consumers.”

Credit Card Usage Up But Below Expectations

Credit card usage was in fact up, by $10.4 billion during the month, but it missed analysts’ expectations for a $12.5 billion gain.

Shifts in Types of Credit

On the one hand “revolving credit facilities, a measure that includes credit cards, declined by $1.8 billion during the month.” Yet there was an overall increase in credit, “driven by non-revolving facilities, which include auto loans as well as student loans made by the government. Non-revolving credit increased $12.3 billion during the month.”

Consumer Spending on Big Ticket Items

One might argue that student loans became a necessary expense as fall approached; however, the persistence of car sales suggests that consumers remained ready to invest in significant purchases.

Legislative Changes to Payment Technologies

Concurrently with these developments, California’s political arena announced the unanimous approval of Assembly Bill 786 by the State Assembly. This bill, also known as The California Money Transmission Act, now awaits the Governor’s expected signature. Its aim is to facilitate the entry of start-up payment technology companies into the market by removing existing barriers.

California’s Move to Support Mobile Payments

California, in other words, wants to stay a leader in the mobile payments business, by clarifying “ the net worth requirements for new licensees in order to lower barriers to entry, and would provide the Department of Business Oversight greater regulatory enforcement over unlicensed activity.”

The Future of Consumer Credit

In other words, the payments sector of the economy is expected to grow, and the ways we measure “credit” will change — customers may not always be using their cards, but they could someday be using their phones to make car down payments, or other mobile or digital means for paying for that first quarter of college — all of which will be harder to divide from other consumer spending activity, when deciding what kind of consumer activity is up, and which is down.

AVPS Is Here to Help

We here at AVPS are ready to help you make sense of it all now, over that same digital device doubling as a payment center! Call your Rep today.