Dive Brief:

  • Credit card balances among small businesses services by Bank of America are on the rise and have surpassed 2019 levels in some categories, according to a report released by the bank Wednesday.
  • As of October, businesses with annual revenue of between $1 million and $5 million have average credit card balances 18% higher than the 2019 average, Bank of America discovered after conducting an aggregated and anonymized data analysis. By contrast, small businesses with revenue under $100,000 have credit card balances only 4% higher than 2019 levels, according to the report.
  • Automated clearing house payments for small businesses rose 7% year-over-year in October. By sector, health services and construction saw the greatest growth in small business payments, the report said.

Dive Insight

Bank of America attributes the rise in small business credit card balances in part to increased spending in 2021 and the first half of 2022.

The report focused on small businesses noted that credit card spending has remained at about the same level over the last year, even as balances have continued to grow. However, when adjusted for inflation, the report found that credit card balances are still below pre-pandemic levels for all categories of small businesses. 

The flat credit card spending combined with the rise of balances “suggests to us that more small businesses are using credit cards as [a] source of financing this year with an increasing portion of balances carrying interest,” the report said.

Meanwhile, credit card balances have been on the rise overall. Thirty-day credit card delinquencies rose to 4.03% month-over-month in October, according to a William Blair report issued Thursday. Millennial credit card delinquency rates surpassed pre-pandemic levels, reaching 2.9% in the third quarter of 2023 compared to 2.5% in Q3 2019, according to a November report from the Federal Reserve Bank of New York’s Center For Microeconomic Data. However, delinquency rates for Gen Z, Gen X and baby boomers are in line with pre-pandemic levels. 

As small business credit card balances rise, card network Visa has had its eye on the current and the next generations of entrepreneurs. A Visa survey released Tuesday revealed that 76% of Gen Alpha respondents aged 8 to 14 years old aspire to run their own businesses. The company announced plans to hire its first junior chief innovation officer, a role that would involve working with its staffers on projects related to payments technology innovation. 

The card giant unveiled its pledge of $100 million on Wednesday to support underserved small and mid-sized businesses within the Asia Pacific Economic Cooperation economies to be distributed over the next five years.

As part of the initiative, Visa also wants to provide financial training and information as well as introduce digital payment methods, so that businesses can receive digital payments and pay for supplies and services with modern technology.


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