Issuers Prepare for Holiday Hangover, Sandy Rebuild
by Jeff Falk
With the amusement park-ride that is our economy, resources like First Data’s monthly SpendTrend Analysis become particularly interesting to read. The curves, dips and free falls of consumer sentiment make predicting payment behavior extremely challenging, so reports like this go a long way toward helping those of us in the industry get our bearings.
In October’s report, First Data outlined several trends that may affect card-issuer decisions during the holiday spending season. For starters, both PIN debit and credit card spending are on an upward trajectory. As fallout from the Durbin Amendment makes it increasingly difficult to maintain debit portfolio profitability, issuers will be looking for ways to drive more of that spend away from debit and toward credit. Promotions like credit-line increases and double rewards points will be common tactics used to encourage debit cardholders to reach for their credit cards.
As spending increases, saving is decreasing – a sign, First Data says, that these increased transactions are likely not sustainable. Indeed, we are heading into the famed Holiday Hangover time, during which many spend-happy consumers will come to regret their decisions to spend vs. save.