Travel replaces shopping as comfort king 🤴
Whether we were dialling up home comforts ordering trackies and plants in 2020, or we’re booking flights for OEs and vacays in 2023, it seems we’re united as global kingmakers when it comes to our debit and credit card spending. And taking the throne last week were Visa (V) and Mastercard (MA), announcing earnings with royal results. 👑
While during the pandemic, US credit card spending decreased by 13%, by the end of 2022, credit card debt increased by 15.5% compared to the previous year, with both Visa and Mastercard saying wanderlust played a role. The global payment companies both reported Q2 net revenues up 11% year-over-year, with Visa’s global payments volume up 13% over the same time, and Mastercard volume outside the US increasing 18%. 💳
Mastercard credits ‘lucrative’ results to not just tickets to travel and accidental Coronation flights, but swiping on experiences while away. 🇬🇧💂 Visa CFO Vasant Prabhu believes consumers remain ‘in good shape’, citing ‘very strong’ spending in services, particularly travel and entertainment. Not dining out on Coronation quiche, however, is American Express (AXP), which the previous week reported a 12% ‘earnings slump’.
While US spenders have racked up ‘jaw-dropping’ credit card debt of US$1.55 trillion - with credit card limits the highest ever at US$4.39 trillion - it’s Millennials and Gen Zers whose debt levels are soaring, with Gen Z’s flexing their cards by travelling up a storm. A Student Beans study revealed they’ve swapped spending on tech (6%), fashion (7%) and food (12%) for taking a ‘well-earned break’, diverting 60% of their spending to travel. ✈️
They’ve now caught up to globetrotting Millennials, with 52% of the generation frequent flying queens of the skies. Although 46% say they’re leaning on the bank of mum and dad to fly the coop, by the end of 2022, the average Gen Z’s credit card debt jumped to US$2,781.
So while credit card companies are right royally happy to provide comfort whatever’s happening in the world, perhaps courier companies with ‘tepid’ earnings like United Parcel Service (UPS), may be hoping we just fake our #travelflex and return to comfort online shopping so they can steal the crown? 👑
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