Bank of America Sees Slowing Credit and Debit Card Spend

Household credit and debit card spending increased 0.1% in March compared to a year earlier.

That is the slowest pace of card spending growth seen since February 2021, the Bank of America Institute said in its Consumer Checkpoint publication released Wednesday (April 12).

Compared to the previous month, household card spending declined 1.5%, seasonally adjusted, according to the report.

“In our view, slowing wages, a drag from lower tax refunds and the expiration of Supplemental Nutrition Assistance Program (SNAP) emergency allotments are driving the slowdown,” the Bank of America Institute said in the report.

After-tax wages and salaries growth slowed to 2% year-over-year in March, cumulative tax refunds are tracking around 10% lower than last year, and the increased benefits under SNAP expired in most states at the end of February, according to the report.

The 2% growth seen in wages and salaries was the lowest rate of increase seen since June 2020, the report said.

“Extraordinary wage growth was one of the main drivers behind the resiliency in consumer spending in 2022, allowing consumers to keep spending even in the face of higher inflation,” the Bank of America Institute said in the report. “However, the latest Bank of America internal data suggests the boost from wages might be fading.”

The month-over-month decline in spending was “broad-based across retail and services,” with retail spending down 2% and services spending down 1%, per the report.

“How concerned should we be about spending going forward? The good news is that consumers still have financial buffers as suggested by lower credit card utilization rates compared to 2019,” the Bank of America Institute said in the report. “However, signs of a cooling labor market and a sustained deceleration in wages could tilt the risks to the downside.”

PYMNTS research has found that in the case of spending on groceries, consumers are putting deals first when they shop.

In a change seen across age cohorts and financial lifestyles, households are downgrading their groceries through reduced quality, quantity or some combination of both as they seek to cut costs, according to PYMNTS’ latest “Consumer Inflation Sentiment” report.