Amex Mid-Year Financial Check-up: Consumers Keeping Debt in Check

by News Guy on July 29, 2010

Majority of Consumers Report No Increase in Debt Over Past Six Months According to American Express Spending & Saving Tracker

NEW YORK – In a mid-year financial check up, three-quarters (75%) of Americans say their debt has not increased over the past six months and in fact more than a third (38%) say their debt has actually decreased, according to the latest American Express Spending & Saving Tracker. While consumers are focused on keeping their debt at bay, they also expressed positive long and short-term spending intentions.  For example, more than one-quarter (26%) of the general population say that the summer weather specifically encourages more spontaneous spending.

This month’s American Express Spending & Saving Tracker surveyed consumers about their spending and saving patterns and intentions midway through 2010 compared to the beginning of the year.  The research sample of 2,004 adults included the general U.S. population, as well as two subgroups – the affluent and young professionals.

“It’s encouraging to see that consumers are continuing to balance their spending intentions while remaining committed to maintaining manageable debt levels,” said Pamela Codispoti, American Express senior vice president and general manager, Consumer Card Products.  “Consumers are taking a measured approach to their finances – loosening their purse strings for meaningful experiences such as dining out and traveling with friends and family, while keeping their eye on their financial goals for the year.”

Debt Levels Steady or Declining as Consumers Make Good on Plans to Pay Down

It’s no coincidence that 75 percent of the general population reports no increase in their debt over the past six months.  More Americans say they have been focused on paying down debt (46%) than saving (29%) this year, and 57 percent of consumers with debt have been moving forward with a specific plan to reduce or stabilize their debt.  An impressive number of consumers say they have decreased their debt over the last six months:

  • The majority of affluents (52%)
  • Almost half (46%) of young professionals
  • More than a third (38%) of the general population

Warm Weather Spurs Spontaneous Spending

While consumers plan to remain focused on reducing their debt, they also expect rising temperatures to spur some additional spending.  Forty-three percent of young professionals and more than one-quarter of the general population (26%) and affluents (25%) agree that summer weather encourages more spontaneous spending. The top areas consumers expect to spend more on include:

  • Summer outings (63%)
  • More dinners out (53%)
  • Summer wear and accessories (44%)

Young professionals will be especially apt to spend more on happy hours with friends (44% versus 32% of general population) and on sporting events (39% versus 25% of the general population).

Most Consumers Set Out to Save, Others Derailed

With regard to savings, consumers’ stated goal for the year appears to have decreased from what was reported when asked the same question in January.   At the beginning of the year consumers said they would try to save an average of $14,000; they now say $12,000.  To date, consumers report having saved 25 percent of their savings goal over the first six months of the year.

For the 51 percent of consumers who say they are behind on their 2010 savings goal, the key reasons cited are:

  • Increase in cost of non-discretionary bills such as utilities, groceries and auto (58%)
  • Unanticipated emergencies (30%)
  • Difficulty balancing wants versus needs (20%)
  • Buying on impulse (20%)
  • Spending outside their means (17%)

Other obstacles include lack of strategy and planning (16%), not tracking cash purchases (13%), spending on life events such as weddings and babies (12%) and pressure to keep up with others’ lifestyles (5%).

Buyer’s Remorse Begone

Only nine percent of consumers say they’ve made a specific purchase so far this year that they regret.  Otherwise, the overwhelming majority (91%) of consumers have made no such purchase and in fact, one-fifth (20%) of consumers say they purchased something over the past 30 days that they wouldn’t have felt comfortable buying six months ago.

Longer Term Outlook: Consumers Spending on Both Wants and Needs

Sixty-four percent of Americans say they expect to spend more (16%) or the same (49%) over the next six months compared to the past six months.  Of the 16 percent of consumers who plan to spend more over the next six months versus the past six months, they plan to do so across a variety of “need-to-have” and “want-to-have” categories, including:

TOP FIVE NEEDS TOP FIVE WANTS
1. Groceries (83%) 1. Dining out (59%)
2. Personal grooming – hair styling, cosmetics, etc (47%) 2. Entertainment (59%)
3. Clothing for self and family/others (35% each) 3. Electronics (49%).
4. Home improvement/repairs (35%) 4. Travel (42%)
5. Tuition/education (27%) 5. Accessories (41%)

Those who expect to spend less (34%) in the next six months compared to the past six say they will do so primarily to save money (50%), maintain a budget (44%), and reduce debt (33%) rather than as a result of reduced income (29%) or anxiety about a potential job loss (8%).

About the American Express Spending & Saving Tracker

The American Express Spending & Saving Tracker research was completed online among a random sample of consumers aged 18+. The research sample of 2,004 adults surveyed the general U.S. population, as well as two sub-groups – the affluent(household income $100k+) and young professionals (under 30, college educated, household income $50k+). Interviewing was conducted by Echo Research between June 19 and June 22, 2010. Overall, the results have a margin of error of +/- 2.2 (or 4.3 among affluents and 4.4 among young professionals) percentage points at the 95 percent level of confidence. For access to previous American Express Spending & Saving Tracker results, please visit www.americanexpress.com/aboutus.

About American Express

American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success.  Learn more at www.americanexpress.com and connect with us on www.facebook.com/americanexpress, www.twitter.com/americanexpress and www.youtube.com/americanexpress.

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