Credit and Debit Show Modest Gains but Travel Spending Drops: Velera Payments Index

By Roy Urrico

While debit and credit activity showed modest gains overall in August, travel purchases continued to decline for a second consecutive year, reported the September 2025 edition of the Velera Payments Index, which includes a “Deep Dive” into the travel sector.

St. Petersburg, Fla.-based payments CUSO Velera, which designed the Velera Payments Index to help credit unions and other financial institutions make strategic, data-informed decisions, reported August consumer spending growth remained consistent, while consumer sentiment softened in August.

Norm Patrick, vice president, Advisors Plus Consulting at Velera.

“As inflation persists and job growth slows, we’re seeing a clear shift in how consumers prioritize spending – especially in discretionary categories like travel,” said Norm Patrick, vice president, Advisors Plus Consulting at Velera. “While debit and credit activity showed modest gains overall in August, Travel purchases continued to decline for the second consecutive year, with Airlines and Lodging leading the pullback. These patterns reflect growing caution among consumers navigating higher prices and economic uncertainty. For credit unions, this is a critical moment to stay connected to member needs and deliver value through flexible, responsive financial solutions.”

Looking at the Economic Indicators

Inflation rose in August by 0.4%, per the Labor Department’s Sept. 11, 2025 update. “With evidence of rising inflation, the impact of tariffs is slowly materializing in consumer prices,” reported the Velera Payments Index. “Grocery prices increased 0.6%, the largest monthly jump in the past three years, with heavily imported items showing greater increases. Coffee prices, with half of the U.S. imports coming from Brazil, are up 20% year-over-year, with Brazilian imports subject to a 50% tariff.”

The September 2025 University of Michigan Index of Consumer Sentiment decreased by 2.8 points, or 5%, compared to August, finishing at 55.4. The drop is strongest amongst middle- and lower-income consumers. For the Consumer Confidence Index, consumer sentiment dropped slightly for August, down 1.3 points to 97.4. For the eighth consecutive month, there is a decline in consumers’ assessment of current job availability, contributing to the lower score and offset by stronger expectations for future business conditions.

Other key takeaways from the Velera Payments Index include:

• The Consumer Price Index (CPI) cumulative 12-month rate of inflation through August is 2.9%, with shelter having the largest impact on the August results. The energy index increased by 0.7% for the month, with increases in the gasoline index. Core CPI, which excludes the food and energy sectors, increased by 0.3% in August as it did in July, bringing the 12-month Core CPI to 3.1%. Increases in Core CPI were seen in airline fares, used cars and trucks, apparel and new vehicles.

• For August, debit transactions were up 3.6% and credit transactions were up 2.2%. Debit purchases were up 5.3%, with the goods, money services and restaurant sectors contributing to more than 80% of the growth. Credit purchases were up 1.9%, with the goods, restaurant and grocery sectors accounting for the entire increase.

• An indication of the slowing economy, job growth in August was again much lower than anticipated by many economists, with 22,000 new jobs being reported. Job gains in healthcare were offset by declines in jobs in the federal government, mining, quarrying and oil/gas extraction.

• The Federal Reserve’s announced a quarter-point interest rate reduction was long awaited, per the Velera report, especially given a much weaker job growth update. August added 22,000 new jobs, while the Bureau of Labor Statistics (BLS) reduced its current employment revision by 911,000.

Deep Dive: Travel

In the September 2025 edition of its Payments Index, Velera revisited its annual Deep Dive into the Travel sector, a discretionary spending category it described as softening this year.

Some key travel sector takeaways:

• Through August 2025, credit purchases in the travel sector were down 4.7% and debit purchases were down 1.5%. The largest contributors to the drop in both credit and debit travel purchases were airlines and lodging (hotel/motel). Overall, credit and debit travel transactions were down 5.1% and 1.2%, respectively, year over year.

• While growth in most travel sub categories was down compared to 2024, one similarity to 2024’s Deep Dive is continued growth for cruise lines. Year to date through August, credit purchases with cruise lines were up 1.2% and debit purchases were up 4.7%. However, transaction growth for cruise lines was down 3.2% for credit and up 3% for debit, signaling the impact of higher prices on purchase growth.

• Airlines, which represent the second largest sub-category within travel purchases, have experienced a year-to-date drop in growth. Through August, Airline credit purchases were down 8.4% and Airline debit purchases were down 6.2%.

• Transactions were also down year to date. Credit airline transactions were down 8.6% and debit airline transactions were down 6.4% compared to 2024.

• The top three U.S. airlines based on purchase dollars are American Airlines, Delta and Southwest. The leading non-U.S.-based carriers are British Airways, Air Canada and Air France. Within this airline breakout, transactions and purchases were down year-over- year for both U.S. and non-U.S. carriers overall; however, growth in purchases for non-U.S. based airlines continues to outperform growth in purchases for U.S.-based carriers throughout the year and began seeing positive growth for July and August 2025. The Velera report recognized shifting consumer payment preferences, including buy now, pay later (BNPL), could affect growth activity within this sector.

What Credit Unions Should Do Now?

“In today’s economic environment, consumer purchase behavior is shifting in ways that directly impact card portfolio performance. To address these realities, credit unions must protect revenue streams and capture new growth opportunities,” the Velera Payments Index suggested.

The report outlined actionable steps to strengthen portfolio resilience, deepen member relationships and plan for sustained financial performance:

With higher average transaction amounts and positive interchange rates, the slowdown in travel spending could pressure interchange income. “Counter this by driving new account growth and focusing promotional campaigns on resilient, high-interchange categories.”

Deliver fast, secure, mobile-first lending that generates new accounts and fuels profitability. “With instant applications, real-time approvals and immediate digital card access, spend can be captured from day one.”

Implement a convenience check balance transfer campaign to strengthen retention, build loyalty, grow balances and create income opportunities. “A competitive low-rate offer delivers meaningful savings for members while supporting revenue growth.”