August and September: Busy Bees or Dog Days?

September, or August in some parts of the country, is often considered one of the busiest spending months of the year. According to the National Retail Federation (NRF), back-to-school spending will produce an additional $130 billion in sales in 2023, setting a new record for the season. Many states offer sales tax holidays during this time to encourage local spending.

While back-to-school spending is often seen as second only to end-of-year holiday spending, data from the U.S. Census Bureau suggests otherwise. Over the past decade, the average change from July to August has been a modest 1.7% increase, lower than the last three months of the year. September, on the other hand, shows a 6.2% decline in spending compared to August.

Store Card, Credit Card Balances Don’t Show Back-to-School Spending Upticks

Recent credit card balance data from Experian indicates that August and September don’t see substantial increases in balances. Credit card balances increased by an average of 0.9% during August, and only 0.1% in September from the prior month. This pattern suggests that consumers spend the early months of the year paying down large balances from December, with modest changes for the rest of the year.

Data from the Federal Reserve supports this trend, showing an average 0.7% increase in August spending and a 0.2% decline in September since 2008.

Average Credit Card Balances in September 2023 and Beyond

This year, several factors are likely to impact consumer spending and credit card balances:

• Tightened credit: Lenders are becoming more selective, which may lead to reduced consumer spending.
• Higher interest rates and APRs: With average APRs exceeding 22%, consumers may shift spending away from interest-accruing card balances to alternative payment plans like buy now, pay later.
• Student loan payments: Resuming in October, these payments may significantly reduce discretionary income.

As a result, any increase in credit card balances in September 2023 is likely due to accrued interest rather than increased spending.

How O1ne Mortgage Can Help

At O1ne Mortgage, we understand the financial challenges that come with fluctuating spending patterns and credit card balances. Whether you’re looking to refinance your home, secure a new mortgage, or simply need financial advice, our team of experts is here to help.

Contact us today at 213-732-3074 for personalized mortgage services that cater to your unique needs. Let O1ne Mortgage be your trusted partner in navigating the complexities of financial management.