Bank of America: consumer spending on cards up from 2021 across all income groups

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Person walks past a Bank of America sign in New York City

By Elizabeth Dilts Marshall

NEW YORK (Reuters) – Bank of America said Thursday that consumers’ debit and credit card spending rose across all income brackets in April, although spending levels for lower-income customers appeared to flatten out in recent weeks.

The bank said total debit and credit card spending was up 13% in April compared to a year ago, thanks to sharp increases in travel and entertainment spending.

Compared to the same period in 2019, before the pandemic, card spending per household was up nearly 24%, with spending for customers with less than $50,000 in annual income rising by 33%.

Spending trends are a closely watched indicator of consumers’ financial health, especially as high inflation in the United States has pushed the price of everyday goods like some food items up by double-digit percentages.

Bank executives and credit rating agencies say that on average, the consumer is in good shape, with elevated checking account balances and low debt. However, there are signs that lower-income consumers and those with lower credit scores might be getting hurt by inflated prices.

Bank of America’s data shows that consumer spending levels are still well above what they were before the COVID-19 pandemic.

Total payments in April were 25% higher than the year ago period, boosted in part by tax payments mid-month. By comparison, last year tax payments were not due until May 21 because of a rare extension granted by the U.S. Internal Revenue Service.

“While higher inflation is leading to higher spending it is clear consumer strength goes beyond this,” David Tinsley, director with the Bank of America Institute, wrote in the report.

(Reporting by Elizabeth Dilts Marshall; Editing by Andrea Ricci)