Thanksgiving week 2020 was weaker than the same week in 2019, according to CUSO’s recent Transaction Trends Update. This is due to how the pandemic has reshaped consumer and business behaviors. In 2019, consumers spent Thanksgiving Day and Black Friday in stores. Of course, that isn't really possible this year. Some consumers did elect to shop in stores but foot traffic was extremely low.
However, the news isn't all negative. In 2020, consumers have turned to online deals in a big way. Some retailers rolled out online Black Friday deals but Thanksgiving consumer spending kicked in the following week. The Monday after Thanksgiving is known as CyberMonday. It is to online sales what Black Friday is to in-store sales. Consumers didn't disappoint this year. Cyber Monday 2020 was a record-breaking retail sales event, blowing past all previous Cyber Monday sales. Online sales have seen strong growth throughout the pandemic, as stores close due to lockdowns and consumers limit where they physically shop.
“Following a dip in payment volume during the Thanksgiving holiday week, we saw a quick return to strong holiday spending buoyed by a record Cyber Monday,” Glynn Frechette, SVP for Advisors Plus at PSCU, said to CreditUnionTimes. “Strong performance in Card-Not-Present activity was fueled by healthy sales on Cyber Monday, strengthening cumulative holiday spending this season.”
We've discussed the consumer spending shift from credit cards to debit cards during the pandemic. The above report provides further evidence of that shift. From CUSO's report, week 49 of 2020 saw debit card purchases 18.1% higher than a year earlier. This was also above the four-week average gain of 14.4%. Credit card spending compared to a year earlier was 5.7% higher.
Another trend in credit card use is that consumers continue to pay down their balances. That isn't isolated to credit union members. It is across the financial industry. This trend started in April of 2020. At the beginning of 2020, Americans owed more than $1 trillion in credit card debt. Wallethub projects that consumers will finish 2020 with $89 billion less in credit card debt, which hasn't occurred since the end of the Great Recession in 2009.