2021 Back-to-School Credit and Debit Card Spending Up

African-American kid with backpack and credit card
By Kenna Smith

4 minutes

The 2021 holiday season may have the the strongest sales on record.

One of the strongest categories following holiday spend, the 2021 back-to-school shopping period was forecasted to increase by 7.5% compared to 2020, according to the National Retail Federation. As many families began planning for their students’ return to in-person classes following virtual learning last year, PSCU measured this year’s impact of back-to-school purchases in the September 2021 edition of our monthly PSCU Payments Index. In the survey, the credit union service organization examined a relevant group of 17 merchant categories, along with results for Amazon, Target and Walmart, for a same-store population of credit unions to see if spending was in line with predictions.

The Findings

Overall, purchases in these merchant categories were up for August 2021 compared to August 2020. Credit purchases (+18%) were up in select back-to-school purchasing-related categories at a greater rate than debit purchases (+12%). The uptick can be attributed to multiple factors, including the challenging credit activity/growth environment in 2020 as debit activity experienced substantial growth.

The merchant category seeing the largest percentage growth in year-over-year purchases was sports apparel, where credit purchases were up 74% and debit purchases were up 63% compared to 2020. Top merchants in this category include Nike, Adidas and Under Armour. For August 2021 results, this merchant category posted a five percentage-point increase in card-not-present credit purchases compared to 2020. For debit purchases, card not present finished at 33%, up 121 percentage points from August 2020. This can likely be attributed to students’ return to both in-person school and athletic activities.

Looking at individual U.S. retailers, Target had the strongest growth for August 2021 purchases with credit purchases up 21% and debit purchases up 11%. Next was Walmart with credit purchases up 12% and debit up 11%. Amazon, which has posted dramatic growth from the onset of the pandemic, finished with credit purchases up 6% and debit purchases up 9%. Of these three large retailers, Amazon is the only one where growth in debit purchases outpaced credit purchases for August 2021 versus 2020.

For the 17 select merchant categories, card-present purchases increased for August 2021. CP credit purchases represented 43% of all credit purchases, up four percentage points—a 26% increase—as compared to August 2020 for these categories. Card-present debit purchases represented 61% of total debit purchases, up one percentage point—a 15% increase—as compared to August 2020. Most of the card-present gains were made in apparel categories, except sports apparel, which grew in card-not-present transactions.

Similarly, all age demographic segments posted a greater increase in credit purchases than debit purchases for August 2021 as compared to August 2020, with the largest increase for the Gen Z population. Gen Z also had the highest year-over-year increase among these merchant categories in both credit purchases (up 49%) and debit purchases (up 20%). The older populations of Boomers and above and Gen X represented the largest portions of overall credit and debit purchases for these merchant categories. For August 2021, Boomers and above represented 37% of credit purchases and 22% of debit purchases, while Gen X represented 33% each for credit and debit purchases.

For the back-to-school categories, the August 2021 average purchase size was up 6% on credit purchases ($75.69) and up 4% on debit purchases ($55.88) year over year. For credit, the average card-not-present purchase was up 5% ($65.03) compared to August 2020, while the average card-present purchase was up 2% ($96.49). From a generational standpoint, all age groups had higher year-over-year percentage increases for credit card-not-present average purchase size, except for Gen Z. For debit, card-present activity was driving the increase, with the average card-present debit purchase up 4% ($59.25). The debit card-not-present average purchase was up 3% ($51.25). For August 2021, all age groups had a higher year-over-year increase for debit card-present average purchase size when compared to card not present.

What’s Next

As we move into the fall and look toward holiday shopping, Mastercard anticipates 2021 holiday sales to increase 7.4% year over year, with this year expected to be the strongest holiday retail season on record. Earlier buying than usual is expected as potential supply chain issues and labor shortages could cause disruptions as the holidays get closer. PSCU will continue to monitor economic indicators and report on spending trends to help financial institutions make informed decisions.

Kenna Smith is VP/marketing operations for Advisors Plus Consulting, a company of CUESolutions provider PSCU. In this role, she oversees B2C marketing and operations. Smith has over 25 years of product and operations experience in the financial services industry.

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