Tag Archives: consumer spending

What Do Customers Want? Survey Shows Growing Appetite for More Communications

In our always connected society, we increasingly rely on real-time information and notifications in our daily lives – from checking our bank account balance on a smartphone app to getting a text message saying a prescription is ready for pick-up. And, new research commissioned by Varolii shows consumers find this type of proactive outreach from businesses extremely welcome and helpful.

This national study of 1,000 adults shows that consumers want more, not less, customer service related communication from businesses. In fact, a majority of respondents – 70 percent – believe these messages could help them avoid issues, like a late fee. And, nearly 80 percent of respondents say they trust the judgment of the companies with whom they have relationships about when, why and how to send such messages.

What About Laws Restricting Communications?

The TCPA dictates that companies cannot automatically dial or send informational text messages to mobile phones without the prior express consent of the recipient. But, consumers may have a different opinion.

The research shows nearly one in four consumers automatically assume that the companies they do business with can contact them. Eighty-four percent of respondents also strongly believe that if they give their cell phone number as their primary contact to a company, then it is acceptable for that company to contact them at that number.

This doesn’t mean we should ignore the regulations – it just means that consumers may be more open to more asks for consent. Balancing compliance and customer satisfaction is a challenge we all face today. Companies must find the right blend of customer outreach – providing the right information at the right time, via the right channel – while still adhering to various state and federal rules.

How Do They Want These Communications?

Consumers still like traditional emails and phone calls, but mobile is fast becoming the top way to reach a majority of American consumers. Today, nearly 80 percent of Americans have given their cell number to a company – with more than one-quarter of respondents indicating they usually or always provide their cell number. Additionally, consumers now favor text messaging just as much as getting a phone call. One in five respondents surveyed say text messaging is their preferred form of communication.

top preferred channels What do Customers Want? Survey Shows a Growing Appetite for More Communications

What Do Customers Want? Survey Shows Growing Appetite for More Communications, 2013, October 24, by Brian Moore, retrieved from http://bankinnovation.net/2013/10/what-do-customers-want-survey-shows-growing-appetite-for-more-communications/.

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Women Better At Handling Credit, Survey Finds

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Women may earn less than men but they are better managers of credit.

According to a new report from Experian , women earn 23% less than men, but men have 4.3% more debt than women. Women also have a slightly higher average credit score of 675 compared to the men’s average of 674.

The study found that men use more of their available credit (31%) than women (30%).

The average man carried $26,227 in debt from credit cards, personal loans and auto loans compared to a $25,095 average for a woman.

Men are also taking out larger mortgages–an average of $187,245 for a man versus $178,140 for a woman. Men also have a higher incidence of late payments on their mortgages (5.7%) than women (5.3%). Continue reading

Minimum-Wage Bump Helps Keep Consumers Spending

Florida’s minimum wage will go up 36 cents on Sunday, an increase that will inject an additional $284 million into the state economy next year.

If you’re one of the 380,000 Floridians earning the minimum wage, this boost to $7.67 an hour is cause for celebration and nearly $750 more in your gross annual income.

If you’re the business owner, your reaction might differ.

“Everything that goes up affects the cost of doing business,” said Jeb Stewart, owner of the Beef ‘O’ Brady’s restaurant at 1315 S. Babcock St. in Melbourne.

Waitpersons’ hourly pay will rise 36 cents an hour on Sunday, from $4.29 to $4.65. That means Stewarts’ payroll will grow by up to $748 a year for each employee.

“We’ll deal with it just like we deal with rising food costs,” said Stewart, who has coped with recession, rising food costs and a delayed professional basketball season. “We’ve been thrown curve balls all along. This is one more pitch we’ve got to take.”

Since voters approved a constitutional amendment in 2004, the state minimum wage must be adjusted annually with cost-of-living increases based on the rate of inflation. The increase will add $14.40 a week to the paycheck of someone working 40 hours a week. The yearly increase would total $748.80, while the worker’s yearly salary would reach $15,954.

Arizona, Colorado, Montana, Ohio, Oregon, Washington and Vermont are also raising their minimum wages on Sunday.

This is actually Florida’s second increase this year: A lawsuit by a workers’ rights groups led to a 6-cent increase in June. The group praised the benefits of the new increase.

“Putting more money into the pockets of these workers…will help sustain consumer spending and spur economic recovery,” Christine Owens, executive director of the National Employment Law Project, wrote in a statement.

“The minimum-wage increase is especially important when so many better-paying jobs in sectors like construction, manufacturing and finance have disappeared,” Owens said. “Floridians who do the hard work of cleaning and securing office buildings, providing day care and serving food will not fall further behind as prices for food, gas and utilities continue to rise.”

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Credit Card Spending Increased Over Holidays

In a turnaround from last year, shoppers were not afraid to pull out the plastic this holiday season. Spending on credit cards jumped 7 percent in November and was up in the first half of December, according to First Data, a company that tracks consumer payment data.

The move back to credit is part of a strategy this year by credit card companies to get people spending on high-interest plastic, and also reflects buoyed consumer confidence. While the increased spending boosts a hurting economy, it also poses risks for shoppers.

And it’s not just plastic that got a seasonal boost. Self-reported spending overall was up 4.1 percent for the period between Nov. 21 and Dec. 25 over last year, according to a recent data from Gallup.com. Americans spent an average of $78 per day over the five-week period. The data is based on weekly surveys of more than 3,000 adults in the United States.

Robust spending in the weeks before Christmas led the National Retail Federation to revise its original holiday forecast for November and December. The organization said it expected sales to rise 3.8 percent over the last year’s expenditures for a record $469.1 billion.

Even without the holiday bump in credit card spending, aggressive credit card promotions over the past year have nudged consumer credit card balances higher. At the end of November, American Express, Capital One and Discover Financial Services all reported higher balances by their card holders. U.S. card loans from all three issuers were up over 3 percent compared to November 2010, Dow Jones reported.

The boost in spending helps the American economy overall, as consumption makes up nearly three-quarters of GDP. Credit card companies also get a boost, as they make money both in swipe fees from cards — typically 2 percent to 4 percent of the purchase — along with interest on carried balances.

For consumers, however, spending on credit cards is a slippery slope. Even while balances may be relatively low, compared to their pre-recession heights, the high interest rate can make it difficult to completely pay down cards quickly. For example, it takes 10 months to eliminate an $1,800 balance with an APR of 15.19 percent, the current average rate, with a $200 monthly payment.

Already, one credit counseling organization says it is getting post-holiday interest from consumers concerned about debt. Consolidated Credit Counseling Services, a national nonprofit credit counseling organization, reported a healthy spike in incoming phone calls seeking debt advice on the Monday after Christmas.

“Traditionally we have seen bumps [in business] in mid-January until about March,” said Howard Dvorkin, founder of the Florida-based counseling agency. “Last year there was no bump because spending was so far off.”

However, just because card spending is up, one credit card expert cautions it’s too early to say whether consumers will go into additional debt from holiday purchases. Bill Hardekopf, who runs the card comparison site LowCards.com, says many of the offers this year were targeted at customers who have a track record of responsible credit usage.

“They are great if you are using them right and paying off entire balance on time and they can make money for you,” Hardekopf said. “But if you are not disciplined and don’t pay it off — or you charge more than you can afford — then credit cards are horrible way to pay for things.”

Credit Card Spending Increased Over Holidays (2011, December 28). Retrieved from http://www.huffingtonpost.com/2011/12/28/holiday-spending-credit-card_n_1173045.html.

Will Capping Credit-Card Rate Help Consumers?

December 14, 2011 – By Robert Powell

If we want to get the economy back on track, maybe we should pass a law that puts a cap on the interest rate banks can charge on credit cards. Doing so, according to proponents of the idea, would free up of billions of dollars that consumers could then use to inject life back into the economy.

Here’s the theory: If the government forced banks — which are on the hook for some $800 billion in credit card debt — to limit the spreads on their credit card interest rates to, say, 10 percentage points over prime, that could pump an estimated $5 billion directly into consumer pockets, as opposed to bank vaults.

But that, say credit card experts, isn’t exactly what would happen.

Greg McBride, vice president and senior financial analyst at Bankrate.com, said two things would happen if government forced banks to cap the spread on credit card interest rates to some percent over prime:

For one, it wouldn’t change rates much, and two, it would have the opposite effect of that intended. “It would further restrict credit to households with less-than-stellar credit,” he said. “And having the government put in place controls that limit credit would have the exact opposite effect.”

To the first point, what we know is this:

The average credit-card interest rate on existing balances is about 13%, according to Federal Reserve’s credit survey. And given that the current prime rate is 3.25%, a 10 percentage-point-over-prime cap wouldn’t change much today for Americans who have credit cards and who have on average nearly $16,000 in such debt, according to CreditCards.com.

Also, 40% of the households with a credit card pay off their balance every month and 60% carry a balance. It’s the 60% who tend to pay more than 13%. And putting a cap on the interest rate charged those folks could put some money back into the economy, according to Dean Baker, an economist at Center for Economic Policy & Research.

“The 13% is an average rate,” he said. “Some people are borrowing at 6% to 7%, but some are paying 20% to 25%. This means in principle this cap would save a decent chunk of change.”

How much it might save, however, is the question of the day. To get at the answer we tried this exercise using the Federal Reserve’s Credit Card Repayment Calculator. Let’s say you have credit card holder with a balance of $16,000 and an APR of 20%, a scenario that might describe roughly 54 million households by my calculation. If that credit card holder makes only the minimum payment on time each month and makes no more charges, it would take 78 years to pay off the balance and that credit card holder would pay about $78,000 in interest over that period of time.

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Consumer Credit In U.S. Rose In October To Two-Year High

U.S. consumer borrowing rose in October to the highest level in two years, propelled by gains in non-revolving debt like auto and student loans.

Credit increased by $7.65 billion to $2.46 trillion, the most since October 2009, Federal Reserve figures showed today in Washington. The advance was in line with the median forecast of economists surveyed by Bloomberg News that projected a $7 billion gain.

The data indicate consumers are relying more on credit to sustain spending as income gains fail to keep up with inflation and home prices drop. At the same time, increasing employment may be making Americans more willing to take on more debt heading into the holiday shopping season.

“It’s hard to determine whether spending on credit is a sign of optimism or a sign of distress, but just anecdotally we feel there is the beginning of tentative feelings of comfort in taking on slightly more debt,” said Dana Saporta, a U.S. economist at Credit Suisse in New York.

Estimates in the Bloomberg survey of 34 economists ranged from gains of $1 billion to $16 billion.

Revolving debt, which includes credit cards, climbed by $366.2 million in October, according to the Fed’s statistics.

Non-revolving debt, including educational loans and loans for autos and mobile homes, increased by $7.28 billion in October, today’s report showed. The Fed’s report doesn’t track debt secured by real estate, such as home equity lines of credit.

Savings Rate

Households may need to borrow more to sustain spending that climbed in the third quarter at the fastest pace this year alongside a drop in disposable income. The savings rate fell to 3.8 percent, the lowest since the last three months of 2007, to support the 2.3 percent advance in purchases last quarter, Commerce Department figures show.

In November, U.S. auto sales rose to a 13.6 million seasonally adjusted annualized rate, the best month since August 2009, according to Autodata Corp. Americans spent a record $52.4 billion during the Thanksgiving weekend, kicking off the holiday shopping season, according to the National Retail Federation.

Lenders may be more willing to support those outlays after restricting credit during the recession. Banks were more likely to ease than tighten standards on consumer credit-card loans and other non-auto loans in the third quarter, according to a Nov. 7 Federal Reserve survey of loan officers. They were also more likely to report “strengthening demand for consumer credit card and auto loans, in line with the past few quarters,” it said.

Total Borrowing

Consumer borrowing, nonetheless, has shrunk relative to its size before the recession. Household debt in the U.S. is currently at about $13 trillion, compared with $14 trillion in 2008, Wells Fargo & Co. Chief Executive Officer John Stumpf said yesterday during a conference hosted by Goldman Sachs Group.

“As I spend time with our consumer lending divisions and out in the public with customers, people are paying debt down,” the leader of the fourth-largest U.S. bank by assets said. While the “pool of consumer loans will shrink,” auto loans “will be a growth area” along with student loans, he said.

Consumer Credit In U.S. Rose In October to Two-Year High.(2011, December 8,) Retrieved from http://www.businessweek.com/news/2011-12-08/consumer-credit-in-u-s-rose-in-october-to-two-year-high.html

DailyMarkets.com Announces Best Credit Cards For Holiday Shopping

-December 6, 2011

Having the right credit card for holiday shopping allows consumers to save money and pay less for their purchases by being rewarded for every dollar they spend. DailyMarkets.com’s guide to the best credit cards for this holiday season will help consumers find the credit cards that will reward them most and help them save more money.

DailyMarkets.com, a financial website based in New York that helps people save smarter and invest smarter, has just launched a new guide to the Best Credit Cards for holiday shopping, so that readers can find the credit cards that will reward them most and help them save more during this holiday. Continue reading