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Black Consumers and Financial Services - US - July 2013

“Given the relatively high rate of unemployment and the impact of the housing crisis, many Black consumers have less-than-perfect credit scores and significantly lower net worth than their White counterparts. According to an article in CNNMoney, White Americans have 22 times more wealth than Black consumers – a gap that nearly doubled during the Great Recession. The median net worth for Whites was $110,729 in 2010, versus $4,995 for Blacks, which has major implications for Black consumers’ ability to build wealth.”

– Tonya Roberts, Multicultural Analyst

Some questions answered in this report include:

  • Compared to 2010, how have Black consumers’ saving and investment habits changed?
  • What are some of the challenges Black consumers face in lowering their debt and increasing their net worth?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Consumer survey data
            • Advertising
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                      • Figure 1: Current share and change in purchasing power, by race/Ethnicity, 1990-2017
                      • Figure 2: Attitudes about financial services industry and own financial situation in last five years, by age, May 2013
                      • Figure 3: Median net worth of households, 2005-09
                      • Figure 4: Types of financial products/services used in last 12 months, by household income, May 2013
                      • Figure 5: Attitudes of Black banked/unbanked consumers, October 2011-November 2012
                      • Figure 6: Reasons for not using checks/debit cards in past 12 months, by age, May 2013
                    • What we think
                    • Issues in the Market

                        • What impact has the economy had on the way Black consumers do business with the financial sector?
                          • More Black consumers than Whites say they’re better off financially
                            • Figure 7: Attitudes about improvement/decline in household financial health in last 12 months, by race/Hispanic origin, October 2011-November 2012
                          • Blacks remain optimistic despite hardships and perceptions of discriminatory practices
                            • Figure 8: Attitudes about financial industry and changes in financial health in past five years, by age, May 2013
                          • Compared to 2010, how have Black consumers’ saving and investment habits changed?
                            • Spending is up considerably – most are saving less or not at all
                              • Figure 9: Changes in spending and saving habits, 2010 and 2012
                              • Figure 10: Agreement that household can only afford basic necessities, by household income, 2010 and 2012
                            • Blacks spend money even though many can only afford basic necessities
                              • Figure 11: Attitudes toward monthly expenses, by age, October 2012
                              • Figure 12: Monthly saving habits of Black households that save money, 2010 and 2012
                            • What are some of the challenges Black consumers face in lowering their debt and increasing their net worth?
                              • Net worth of Whites is 20 times that of Blacks
                                • Figure 13: Median net worth of households, 2005-09
                                • Figure 14: Asset ownership by type of asset, 2005-09
                              • Black consumers are risk averse
                                • Figure 15: Attitudes, opinions, and interests, by race/Hispanic origin, October 2011-November 2012
                              • Black consumers less likely than White consumers to fear debt
                                • Figure 16: Personal finance, by race/Hispanic origin, October 2011-November 2012
                              • Black consumers want help managing money and planning for retirement
                                • Figure 17: attitudes toward financial services, by race/Hispanic origin, October 2011-November 2012
                            • Trend Application

                                • Trend: Access All Areas
                                  • Trend: Help Me Help Myself
                                    • Mintel Futures: Brand Intervention
                                    • Black Household Income and Buying Power

                                      • Key points
                                        • Blacks most likely to live in one-person households
                                          • Figure 18: Household size, by race/Hispanic origin of householder, 2011
                                        • College-educated Black consumers most likely to see income increase
                                          • Figure 19: Changes in household income within the last year, by education, October 2012
                                        • Single households driving lower median income compared to other groups
                                          • Figure 20: Median household income, by race and Hispanic origin of householder, 2011
                                          • Figure 21: Median household income, by race and Hispanic origin of householder, 2008 and 2011
                                        • Black purchasing power expected to rise significantly by 2017
                                          • Figure 22: Purchasing power, by race/Hispanic origin, 1990-2017
                                          • Figure 23: Purchasing power, by race/Hispanic origin, 1990-2017
                                        • Buying power concentrated in South and Northeast
                                          • Figure 24: Top 10 states/regions with the largest share of Black buying power, 2012
                                        • Affluent Blacks most prevalent in Northeast
                                        • Attitudes Toward Money, Primary Financial Concerns, and Risk

                                          • Key points
                                            • Higher-income Blacks more optimistic and believe discrimination exists
                                              • Figure 25: Attitudes about financial service providers and own household situation in past five years, by income, May 2013
                                            • One third of unemployed attribute optimism to President Obama
                                              • Figure 26: Attitudes toward financial services and own financial situation, by employment status, May 2013
                                            • Higher-income Blacks are more confident in spending and more fiscally fit
                                              • Figure 27: Economic outlook segmentation, by gender and household income, October 2011-November 2012
                                            • Blacks feel their economic outlook is bleaker than America as a whole
                                              • Figure 28: Economic situation – Personal vs. U.S. outlook overall, by race/Hispanic origin, October 2011-November 2012
                                            • Higher-income Black consumers are spending and saving more
                                              • Figure 29: Increase/decrease in spending in last year due to the economy, by household income, October 2012
                                          • Banking and Investment Services

                                            • Key points
                                              • The majority of Blacks have bank accounts, especially older consumers
                                                • Figure 30: Financial products/services used, by age, May 2013
                                              • Blacks more likely to bank with credit unions, Bank of America, or Chase
                                                • Figure 31: Usage of bank brands, by race/Hispanic origin, October 2011-November 2012
                                              • More Blacks use PayPal than Western Union to send or receive money
                                                • Figure 32: Types of financial products/services used, by age, May 2013
                                              • High-income Blacks are more likely to have credit cards and bank accounts
                                                • Figure 33: Types of Financial products/services used in last 12 months, by household income, May 2013
                                                • Figure 34: Non-bank financial products/services used in last 12 months, by household income, May 2013
                                              • Unemployed are unbanked – but retirees maintain relationship with banks
                                                • Figure 35: Financial products/services used in last 12 months, by employment status, May 2013
                                              • Infrequency of writing checks drives why unbanked don’t have an account
                                                • Figure 36: Reasons for not using checks/debit card, by age, May 2013
                                              • One fourth have used payday loans five or more times in last 12 months
                                                • Figure 37: Payday loan/advance services brands used in last 12 months and frequency, Blacks overall, May 2013
                                                • Figure 38: Frequency of use – payday loan/advance services in last 12 months, Blacks overall, May 2013
                                              • Poor credit and expediency of getting payday loans attract customers
                                                • Figure 39: Reasons for using payday loan/advance services, Blacks overall, May 2013
                                              • Blacks are less likely to go online for banking, insurance, and investments
                                                • Figure 40: Online activities incidence and frequency for banking, financial information/stock trading, and medical services and information, by race/Hispanic origin, October 2011-November 2012
                                              • Blacks who do use online banking do it more frequently than others
                                                • Figure 41: frequency of online banking, financial information/stock trading, and medical services and information, by race/Hispanic origin, October 2011-November 2012
                                              • Blacks conduct more transactions from computer than in person or mobile
                                                • Figure 42: Banking activities conducted by type of transaction, Blacks overall, July 2013
                                              • Black online customers conduct more banking transactions
                                                • Figure 43: Banking services used by type of transaction, Blacks overall, May 2013
                                              • Blacks more likely to carry prepaid cards – Visa more likely in their wallet
                                                • Figure 44: Prepaid card usage, by race/Hispanic origin, October 2011-November 2012
                                                • Figure 45: Prepaid card usage, by race/Hispanic origin, October 2011-November 2012
                                              • Blacks more likely than anyone else to send or receive money within U.S.
                                                • Figure 46: Usage of remittance services, by race/Hispanic origin, October 2011-November 2012
                                                • Figure 47: Top five companies used for sending/receiving money, by race/Hispanic origin, October 2011-November 2012
                                              • More Blacks have credit cards issued by Chase, Bank of America, Capitol One
                                                • Figure 48: Incidence of credit card ownership, by race/Hispanic origin, October 2011-November 2012
                                                • Figure 49: Incidence of credit card issuers used, by race/Hispanic origin, October 2011-November 2012
                                                • Figure 50: Type of credit cards and brands owned, by race/Hispanic origin, October 2011-November 2012
                                                • Figure 51: Mean credit card usage frequency in last 30 days by brand, by race/Hispanic origin, October 2011-November 2012
                                              • Black credit card holders prefer cash back and earning points
                                                • Figure 52: Types of rewards programs associated with credit cards by brand, by race/Hispanic origin, October 2011-November 2012
                                              • Black consumers are more likely to maintain a credit card balance
                                                • Figure 53: Proportion of balance usually paid monthly on credit cards, by race/Hispanic origin, October 2011-November 2012
                                              • Black consumers less likely than Whites and Asians to have loans
                                                • Figure 54: Incidence of loans outstanding, by type of loan, by race/Hispanic origin, October 2011-November 2012
                                              • Black consumers are less likely than Whites and Asians to save and invest
                                                • Figure 55: Incidence of savings accounts, by type of savings products, by race/Hispanic origin, October 2011-November 2012
                                                • Figure 56: incidence of types of investment accounts and investments products owned, by race/Hispanic origin, October 2011-November 2012
                                                • Figure 57: Incidence of mutual funds/brokerage account ownership, by race/Hispanic origin, October 2011-November 2012
                                                • Figure 58: Incidence of mutual funds/brokerage accounts by primary firm, by race/Hispanic origin, October 2011-November 2012
                                            • The Unbanked

                                              • Key points
                                                • Unbanked are vastly different than banked consumers in many areas
                                                  • Figure 59: Demographic profile of the Black unbanked consumer, October 2011-November 2012
                                                • The unbanked need help – they are unhappy with life and much less optimistic
                                                  • Figure 60: Attitudes of black unbanked consumers, by banked and unbanked, October 2011-November 2012
                                                • Mismanagement of funds and lack of guidance hinder the unbanked
                                                  • Figure 61: Unbanked consumers’ attitudes and behaviors toward personal finances, by banked and unbanked, October 2011-November 2012
                                                • The unbanked most likely live in multigenerational households
                                                  • Figure 62: Role in paying bills, by banked and unbanked, October 2011-November 2012
                                                • The unbanked pay bills in person or by mail, using cash or money order
                                                  • Figure 63: Methods used to pay bills, by banked and unbanked, October 2011-November 2012
                                                  • Figure 64: Forms of payment used to pay bills, by banked and unbanked, October 2011-November 2012
                                                • One fourth of the unbanked say their finances are getting better
                                                  • Figure 65: Personal economic situation compared to year previous, by banked and unbanked, October 2011-November 2012
                                              • Insurance Policies Owned

                                                • Key points
                                                  • Black consumers more likely than White consumers to be uninsured
                                                    • Figure 66: Incidence of ownership of health/life insurance, by race/Hispanic origin, October 2011-November 2012
                                                    • Figure 67: Types of health/life insurance owned, by race/Hispanic origin, October 2011-November 2012
                                                  • Black consumers spend more on health insurance and drugs
                                                    • Figure 68: Distribution of average annual expenditures for healthcare, by race of reference person, 2011
                                                    • Figure 69: Increase/decrease in household spending on medical expenses, by household income, October 2012
                                                  • Blacks willing to pay more for health, yet 21% are uninsured
                                                    • Figure 70: Diet and health, by race/Hispanic origin, October 2011-November 2012
                                                  • Blacks weigh risks of getting ill with need for insurance
                                                    • Figure 71: Attitudes about health and medicine, by race/Hispanic origin, October 2011-November 2012
                                                  • Blacks more likely to have HMO and be insured by Blue Cross Blue Shield
                                                    • Figure 72: Incidence of ownership of health insurance, by type, by race/Hispanic origin, October 2011-November 2012
                                                    • Figure 73: Provider of health/life insurance, by race/Hispanic origin, October 2011-November 2012
                                                  • Blacks are drawn to flexible spending and health reimbursement accounts
                                                    • Figure 74: Type of health insurance savings, reimbursement or spending account held, by race/Hispanic origin, October 2011-November 2012
                                                  • Black consumers more likely to pay for insurance out of pocket
                                                    • Figure 75: How medical policy is obtained, by race/Hispanic origin, October 2011-November 2012
                                                  • Marketers should reach out to employers who don’t provide insurance to reach Blacks
                                                    • Figure 76: Method used to purchase health insurance policy, by race/Hispanic origin, October 2011-November 2012
                                                  • Blacks more likely to have whole life than others – value of policy much lower
                                                    • Figure 77: Type of life insurance policy owned, by race/Hispanic origin, October 2011-November 2012
                                                    • Figure 78: Value of life insurance policy, by race/Hispanic origin, October 2011-November 2012
                                                    • Figure 79: Average annual expenditures for CUs for personal insurance and pensions, by race of reference person, 2011
                                                  • Property and auto insurance
                                                    • Figure 80: Vehicle ownership, by gender and household income, October 2011-November 2012
                                                    • Figure 81: Vehicle ownership new vs. used, by gender and household income, October 2011-November 2012
                                                    • Figure 82: Amount spent on vehicle, by gender and household income, October 2011-November 2012
                                                  • Higher-income Blacks more likely to have roadside assistance – AAA most common
                                                    • Figure 83: Auto club membership, by gender and household income, October 2011-November 2012
                                                    • Figure 84: Auto club company membership with, by gender and household income, October 2011-November 2012
                                                  • Nearly all Blacks have auto insurance – fewer have homeowners or renters insurance
                                                    • Figure 85: Property/Vehicle insurance owned, by race/Hispanic origin, October 2011-November 2012
                                                    • Figure 86: Type of property/vehicle insurance owned, by race/Hispanic origin, October 2011-November 2012
                                                  • State Farm and Allstate’s targeted marketing efforts pay off
                                                    • Figure 87: Provider of property/vehicle insurance policy, by race/Hispanic origin, October 2011-November 2012
                                                    • Figure 88: Method used to obtain homeowner's policy, by race/Hispanic origin, October 2011-November 2012
                                                  • Value of homeowner policy lower for Blacks – driven by where Blacks reside
                                                    • Figure 89: Amount of coverage on homeowner's insurance, by race/Hispanic origin, October 2011-November 2012
                                                  • Small business owners are a significant opportunity for marketers
                                                    • Figure 90: Incidence of other types of insurance carried, by race/Hispanic origin, October 2011-November 2012
                                                    • Figure 91: Type of other insurance carried, by race/Hispanic origin, October 2011-November 2012
                                                • The Uninsured

                                                  • Key points
                                                    • Uninsured self-treat conditions and little is done to prevent illness
                                                      • Figure 92: Attitudes about health and medicine, by insured anduninsured, October 2011-November 2012
                                                    • Very few uninsured say things are looking better than a year ago
                                                      • Figure 93: Personal economic situation compared to previous 12 months, by insured and uninsured, October 2011-November 2012
                                                  • Marketing Strategies

                                                      • The Rush Card – Visa Prepaid Debit Card
                                                        • Figure 94: Visa Prepaid card ad, 2013
                                                      • State Farm
                                                        • Figure 95: State Farm ad, 2013
                                                        • Figure 96: State Farm Life Insurance ad, 2013
                                                        • Figure 97: State Farm Insurance ad, 2013
                                                      • Wells Fargo Bank
                                                        • Figure 98: Wells Fargo Bank ad, 2013
                                                        • Figure 99: Wells Fargo Bank ad, 2013
                                                      • Allstate
                                                      • U.S. Black Population

                                                        • Key points
                                                          • U.S. population by race/Hispanic origin
                                                            • Figure 100: Population, by race/Hispanic origin, 2008-18
                                                            • Figure 101: Population, by race/Hispanic origin, 1970-2020
                                                            • Figure 102: Asian, Black, and Hispanic populations, 1970-2020
                                                          • Age
                                                            • Generations by race
                                                              • Figure 103: U.S. population by race, and by generation, 2011
                                                            • Black population by age
                                                              • Figure 104: U.S. Black population, by age, 2008-18
                                                              • Figure 105: U.S. population, by age, 2008-18
                                                            • U.S. Black geographic concentration
                                                              • Figure 106: Black geographic concentration, by region, 2007
                                                            • Black population by state
                                                              • Figure 107: States with largest Black population, 2011
                                                              • Figure 108: States with largest Black population, by distribution, 2008
                                                            • Population by geographic concentration
                                                              • Figure 109: States (including District of Columbia) ranked with the highest share of Black residents, 2011
                                                            • Black metro areas
                                                              • Figure 110: Metropolitan status of Black households, 2006 and 2011
                                                              • Figure 111: Top 10 metropolitan areas with the largest number of Black residents, 2010
                                                            • Black households
                                                              • Figure 112: Average household size, by race/Hispanic origin/race of householder, 2001 and 2011
                                                              • Figure 113: Presence and ages of children in the household, by race/Hispanic origin, 2011
                                                              • Figure 114: Marital status, by race and Hispanic origin, 2011
                                                          • Appendix – Additional Tables

                                                              • Figure 115: Attitudes about financial services, by gender and age, May 2013
                                                              • Figure 116: Attitudes about financial services, by gender and household income, May 2013
                                                              • Figure 117: Attitudes about financial services, by household income, May 2013
                                                              • Figure 118: Reasons payday loan/advance services are used, by payday loan/advance services brands used and frequency (nets), May 2013
                                                              • Figure 119: Offline banking sources used by type of transaction, by age, May 2013
                                                              • Figure 120: Online banking sources used by type of transaction, by age, May 2013
                                                              • Figure 121: Offline banking sources used by type of transaction, by gender and age, May 2013
                                                              • Figure 122: Online banking sources used by type of transaction, by gender and age, May 2013
                                                              • Figure 123: Online banking activities by type of transaction, by banked/underbanked, May 2013
                                                              • Figure 124: Offline banking activities by type of transaction, by banked/underbanked, May 2013
                                                              • Figure 125: Attitudes toward the internet, by insured/uninsured, October 2011-November 2012
                                                              • Figure 126: Online activities incidence and frequency for banking, financial information/stock trading, and medical services and information, by race/Hispanic origin, October 2011-November 2012
                                                              • Figure 127: Online activities incidence and frequency for banking, financial information/stock trading, and medical services and information, by race/Hispanic origin, October 2011-November 2012
                                                              • Figure 128: Online activities incidence and frequency for banking, financial information/stock trading, and medical services and information, by race/Hispanic origin, October 2011-November 2012
                                                          • Appendix – Trade Associations

                                                            Companies Covered

                                                            • Advance America, Cash Advance Centers, Inc.
                                                            • American Express Company (The)
                                                            • Banco Popular North America
                                                            • Bank of America Corporation
                                                            • Barclays Bank plc
                                                            • BB&T Corporation
                                                            • Charles Schwab Corporation
                                                            • Citibank
                                                            • Edward D. Jones & Co., L.P.
                                                            • Fifth Third Bancorp
                                                            • Goldman Sachs Group, Inc., The
                                                            • HSBC USA Inc.
                                                            • JPMorgan Chase & Co
                                                            • Kmart Corporation
                                                            • MasterCard Incorporated
                                                            • Merrill Lynch & Co. Inc
                                                            • MoneyGram International, Inc.
                                                            • Morgan Stanley
                                                            • OppenheimerFunds, Inc.
                                                            • Prudential Financial, Inc
                                                            • SunTrust Banks Inc.
                                                            • T. Rowe Price Group, Inc.
                                                            • The PNC Financial Services Group
                                                            • The Vanguard Group, Inc.
                                                            • USAA
                                                            • Visa U.S.A. Inc.
                                                            • Wachovia Corporation
                                                            • Walmart Stores (USA)
                                                            • Wells Fargo & Company
                                                            • Western Union Holdings, Inc

                                                            Black Consumers and Financial Services - US - July 2013

                                                            £3,199.84 (Excl.Tax)