High-Income Consumers Sustain Card Spending Amidst Economic Pressures
In a period marked by ongoing inflation and a noticeable widening of the income gap, a recent analysis reveals that American consumers, especially those in higher income brackets, are steadily increasing their reliance on credit and debit cards. This upward trend, observed over several consecutive months, suggests a complex interplay between financial habits, economic pressures, and differing levels of financial resilience across various demographics.
Detailed Report: Card Usage Surges as Financial Divide Deepens
Data released on a Wednesday in November 2025 by the Bank of America Institute indicates a significant uptick in credit and debit card transactions. Specifically, overall household spending via cards recorded a 2.4% year-over-year increase in October and a 0.3% rise from September, marking the fifth consecutive month of growth. This surge was largely propelled by an increase in spending on services. Notably, holiday-related expenditures per household saw a robust 5.7% jump compared to the previous year, even though the number of retail transactions had slightly decreased since January. This suggests that consumers might be paying more for individual items rather than purchasing a larger quantity, reflecting the impact of rising prices.
A deeper dive into the report highlights a clear divergence in spending patterns based on income levels. Households with higher incomes were the primary drivers of this spending acceleration, with their card usage climbing by 2.7% in October. In stark contrast, lower-income families experienced a modest 0.7% increase. Further analysis from Bank of America corroborated this divide, showing that after-tax wages for top earners grew by 3.7%, whereas those at the bottom saw only a 1.0% increase. Despite these disparities, checking and savings account balances across all income groups still remain above their 2019 levels. However, a survey conducted by the bank revealed that only 38% of respondents felt financially secure heading into the 2025 holiday season, underscoring a pervasive sense of financial unease despite the seemingly robust spending figures.
Complementary data from other sources reinforces this narrative of steady but inflation-influenced spending. The Census Bureau's September figures showed retail trade sales approximately 4.8% higher than the previous year, with non-store retailers experiencing a nearly 10% boost and restaurants and bars seeing a 6.5% increase. Adobe Analytics reported an 8% rise in online sales for October, with 'buy now, pay later' services also growing at a similar rate, indicating that households are increasingly leveraging alternative credit options to manage their budgets. Against this backdrop, consumer prices generally climbed 3% from the prior year, suggesting that a substantial portion of the observed spending growth is attributable to higher prices rather than an actual increase in goods and services consumed.
This economic report prompts reflection on the evolving landscape of consumer finance. The sustained increase in card spending, particularly among higher-income households, could be interpreted as a sign of continued economic vitality for certain segments of the population. However, the widening gap in spending power and wage growth between different income brackets, coupled with the reliance on alternative credit and a general sentiment of financial discomfort, reveals a more nuanced and potentially fragile economic recovery. It highlights the critical need for policies that address income inequality and inflation, ensuring that economic growth benefits all citizens, not just a privileged few.