The news: Major US card issuers reported explosive payments growth in Q3 compared with the previous quarter.

• Bank of America: Credit and debit purchase volume increased 21% year over year (YoY) in Q3 (+24% Yo2Y). Growth outpaced Q3 2020’s modest 2% YoY bump. On the company’s earnings call, BoA chief financial officer Paul Donofrio attributed the strong numbers to new accounts and the credit spending rebound.
• JPMorgan Chase: Q3 credit and debit card sales volume surged 26% YoY (+24% Yo2Y) (YoY). In Q3 2020, volume dropped 1% YoY. Travel and entertainment spending specifically grew 8% Yo2Y, JPMorgan’s chief financial officer, Jeremy Barnum, said on the company’s earnings call.
• Citi: Card purchase sales volume in Citi’s global consumer banking segment jumped 20% YoY in Q3 (+8% Yo2Y). In the same quarter last year, the metric slipped 10% YoY.
• Wells Fargo: In Q3, credit card point-of-sale (POS) volume grew 24% YoY (+30% Yo2Y)—a significant improvement from Q3 2020’s 6% YoY drop.

How we got here: Many consumers found themselves in a better financial position this quarter than they were last year, which may have increased their willingness to use credit cards. The US ended Q3 2020 with a 7.8% unemployment rate—this year, September’s unemployment rate came in at 4.8%, according to the US Bureau of Labor Statistics.

Issuers likely saw an opportunity to capitalize on improving economic conditions and introduced a bevy of new and revamped card products with a focus on flexibility and rewards—a main attraction to credit cards.

• In June, Citi debuted the Custom Cash card, which automatically applies 5% back to the category in which each customer spends the most per billing cycle, with 1% back on everything else.
• Bank of America launched the no-annual-fee Unlimited Cash Rewards card in July, which offers a flat 1.5% cash back on all purchases and access to the issuer’s relationship rewards program.
• And in August, Chase added rewards for hotel stays, dining purchases, and car rentals to its Sapphire Preferred and Sapphire Reserve premium travel cards.

What’s next? Card issuers are positioned for big gains from the upcoming holiday season, which will top out at a whopping $1.147 trillion in US sales, per eMarketer forecasts from Insider Intelligence.

Issuers may also push installment lending offerings to step up their defense against buy now, pay later (BNPL) players, most of which experienced a volume surge during last year’s holiday season.

• For example, Afterpay said that referrals to global merchants from its Shop Directory skyrocketed 145% YoY and the average US customer basket size increased 30% between October and December 2020.
• If issuers can convince holiday shoppers that credit cards are the better option than third-party BNPL solutions, they’ll be well-positioned for Q4 growth.

Related content: Check out our recent report “US Cash-Back Credit Card Emerging Features Benchmark 2021” for a deep dive into what card features US cardholders value most and how popular card programs stack up against each other.