Velera: Feeling the Payment Pinch with Delinquencies on the Rise

The March Velera Payments Index shows credit and debit activity strengthened in February, with consumer spending remaining resilient despite weak sentiment and rising global tensions. This edition also looks at the rising year-over-year delinquency rates-particularly among younger and lower-income consumers-highlighting the importance of modern, data-driven collections strategies for credit unions.

Here are the key takeaways from the March report according to Velera:

• Year-over-year growth in transactions and purchases in February was strong across both debit and credit. Debit purchases increased by 7%, with the Money Services and Goods sectors accounting for two-thirds of that growth. Credit purchases were up 4.4%, with the Goods and the Service sectors accounting for 68% of the entire increase. For February, debit transactions were up 7% and credit transactions rose by 4%.
• Since our last delinquency Deep Dive (February 2025), delinquencies have begun trending upward after steadily declining for the first 10 months of last year. Overall credit card delinquencies for February 2025 were 2.66%, up 0.16% year over year. Additionally, we saw higher delinquency rates among younger age groups, as evidenced by the notable increase in the youngest generational segment (Younger Gen Z), up 10.67% year over year to 13.69% in February 2026. Delinquency rates tend to decline as the population ages, with the Boomer+ generation having the lowest delinquency rate for February 2025 at 1.63%. Lower-income households continue to show sharper swings in both delinquencies and credit usage. The consumer landscape is still adjusting to higher costs and shifting financial cushions - with very different experiences depending on age and income.
• CPI rose 0.3% in February, with the 12-month inflation rate remaining steady at 2.4%. Shelter was the primary driver of the monthly increase.
• Gasoline prices have increased sharply, rising $0.57 per gallon (or 19%) since the start of the U.S./Israel war with Iran on Feb. 28. It is unknown how long the market will experience higher energy prices because of the conflict or what the impact will be on the U.S. economy. As an informal calculation, each $10 increase in the price of a barrel of oil equates to a 0.2% increase (approximately) in inflation.

What Should Credit Unions Do Now?
In order to maintain relevance, maximize engagement and best support members, credit unions should consider the following strategies:

• Strengthen collections to better manage elevated delinquencies. Credit unions should prioritize modernizing their collections approach to enhance recovery and deepen member engagement, especially as delinquency trends rise among younger consumers. Using multichannel outreach to maximize reach, personalizing communication by risk level and member segment, and adopting smarter technology to prioritize accounts and streamline resolution are a few effective strategies. Credit unions can better manage elevated delinquencies while delivering a more supportive and efficient member experience by combining tailored outreach, digital-first engagement and advanced analytics. Additional in-depth insights can be found in this recent blog.
• Outsource delinquency management to improve efficiency and reduce risk. With increased pressure on internal staffing, training and technology resources, outsourcing delinquency management can help credit unions reduce operational burden, mitigate risk and ensure members receive professional, compliant and empathetic support. Consider working with an organization that offers a full-service first and third-party collections solution, like TriVerity, a Velera company, in order to help alleviate pressure on internal staffing. Partnering with a trusted provider allows credit unions to stay focused on their core mission while strengthening financial performance.
• Boost cardholder engagement with targeted summer usage campaigns. Targeted usage campaigns provide credit unions with an efficient, data driven way to influence member spending during key seasonal moments, most notably during summer travel season and Amazon's peak July shopping period. Leveraging targeted campaigns can help your credit union strengthen member card preference, drive incremental spend and support long-term portfolio growth.

Looking Ahead
The second Federal Open Market Committee (FOMC) meeting concluded on March 18 and interest rates were left unchanged. Rates might be affected in next month's meeting, which concludes on April 29, after the Fed can better understand the implications of the higher energy costs on the economy due to the U.S./Israel war.

If you would like more information about Velera, please contact Sara Taddeo, Manager of Relationship Services, at [email protected]