Travel has always been the domain of credit cards. Whether for the reward points or for the available funding, credit cards rule. The COVID-19 pandemic has again, at least temporarily, created new spending habits. An article in Digital Transactions reporting on data from PSCU found here, has uncovered that consumers are using their debit card for hotels and related travel expenses.
Since it is customary for hotels and card rental agencies in particular to place an authorization amount for a value greater than the final cost, consumers may be tying up their balances for days. Perhaps those that are flush with cash from Economic Impact Payments and don’t need those funds for essential items are in a position to manage these big transactions.
Likely this will drive up the average debit card transaction level. Here’s some of the data that the article highlighted:
Released Thursday, the index shows that debit card use accounted for 35% of transactions at hotel and motels, up from 29% in March 2019 and 27% in March 2020. Credit use at hotels and motels has increased, too, reaching 39% in March. That’s up from 33% in 2019 and 34% in 2020. PSCU, a St. Petersburg, Fla.-based credit union service organization, publishes the monthly index based on data from financial institutions it works with.
Other travel segments are showing some life, albeit at different pacing. Overall airline purchases are slowly climbing back from the low point in April 2020. For March, debit transactions are down 6% from March 2019 and credit transactions down 33%. “Each have shown monthly improvement, with March 2021 marking the most notable jump since the onset of the pandemic,” PSCU says.
Auto rental has fared the best in travel, particularly in debit transactions, which are up 38% in March from the same month in 2019. Credit transactions have yet to return to positive territory, the report says, and are down 8% in March 2021 from March 2019. The one positive is that when looking at March 2021 and March 2020, credit transactions are up 56%.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group