Big leap ahead
Credit card usage grows sharply in 2021
Credit card usage recovered above 2019 levels in 2021.

VISA and Mastercard products offered by deposit-taking institutions saw fair recovery in usage in 2021, Bank of Jamaica (BOJ) data indicate after a fall-off in volume and value in the year of the novel coronavirus pandemic.

The credit product remains a robust earner for commercial banks, with National Commercial Bank among service providers which have announced increased service fees in 2022.

Total Jamaican-dollar credit card receivables climbed to $50.3 billion at the end of 2021, a 5.9 per cent uptick over 2020 when spending resulted in balances of $47.5 billion.

Comparatively, in 2020 credit card spending was flat, with a 0.9 per cent variation compared to 2019.

Receivables of $47.5 billion in 2020 compared to $47.05 billion at year end 2019.

US-dollar card spending was reduced in the last two years, compared to spending in 2019. During 2021 spending using US-dollar-denominated cards was US$46.5 million compared to US$45.5 million the year before in 2020.

Reduction in US-dollar-denominated card usage was deeper, comparatively, in 2020 when balances fell 13.1 per cent compared to US$52.3 million in credit card receivables at year end 2019.

Meanwhile, Jamaican-dollar credit cards in distribution increased marginally from 335, 587 in 2020 to 395, 295 in 2021.

Increased credit card usage is considered a sign of continuing consumer strength. Similarly in the United States in 2021, monthly credit card purchase volumes rose, with purchase volumes 23-27 per cent above year-earlier levels.

Analysts say high inflation was partly responsible for the spending increase in the United States.

In comment, ABA Chief Economist Sayee Srinivasan said “The strong labour market allowed consumers to continue driving the economy forward.

“While the US economy is dealing with higher inflation and consequently rising interest rates, as evidenced by credit card debt as a share of disposable income, US households’ balance sheets remain robust to help absorb shocks from these headwinds.”

The credit product remains a robust earner for commercial banks, with National Commercial Bank among service providers who have announced increased service fees in 2022.
Avia Collinder

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