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Consumer Attitudes Towards Debt - US - July 2013

“Many financial services providers, such as credit card issuers and home equity loan providers, have traditionally focused their business models on encouraging consumers to spend money. However, a more appropriate model that meets the goals of consumers in these days of household financial responsibility may be to help consumers find ways to help themselves spend less, save more, and avoid incurring further debts.”

– Susan Menke, Senior Financial Services Analyst

Some issues addressed in this report include:

  • Millennials are looking for advice and online tools
  • A secondary target are those aged 55+
  • Brainstorm for ways to enrich the lives of the “stressed out”

 

It has been five years since the financial crisis and a good seven years since the peak and subsequent decline in housing prices, two events that rocked the country. This report explores the aftermath of these events. Consumer debt reached record levels in the years leading up to 2007-08, and many are paying it back to this day. What this means is that they are still living lives that are affected either by their current major debt loads, or the memory of the impact of those debt burdens in the past.
 
This report discusses how consumers are managing their debt, what their views are about debt and credit, and how this impacts their ability to save. The types of debt include mortgage debt and the continuing incidence of “underwater” mortgages, credit card debt, HELOCs, and student loans, which have replaced other forms of debt as the fastest-growing consumer obligation.
 
This report looks at the following:
  • How are consumers responding to their current levels of debt, and what are their plans for incurring more debt?
  • What are their priorities in paying off debt?
  • What groups are the least and most burdened by debt?
  • How will this impact their ability to spend and save?
  • What are consumer attitudes about people who have debt and taking on new debt?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Direct marketing creative
            • Abbreviations and terms
              • Abbreviations
                • Terms
                • Executive Summary

                    • The market
                      • Figure 1: Incidence of debt in households, by type of debt, April 2013
                      • Figure 2: Composition of U.S. consumer debt, Q4 2012
                    • Market drivers
                      • Figure 3: Case Shiller 20-city home price index, 1/1/2000-4/1/2013
                    • The consumer
                      • Figure 4: Goals and behaviors concerning debt, April 2013
                      • Figure 5: Agreement with attitudes toward debt, April 2013
                    • Differences by demographic groups
                      • What we think
                      • Issues in the Market

                          • Millennials are looking for advice and online tools
                            • A secondary target are those aged 55+
                              • Brainstorm for ways to enrich the lives of the “stressed out”
                              • Trend Applications

                                  • Trend: Totophobia
                                    • What we've seen
                                      • Trend: The Nouveau Poor
                                        • What we've seen
                                          • Mintel Futures: Brand Intervention
                                            • What we've seen
                                            • Current Economic Environment

                                              • Key points
                                                • The economy is growing, but slowly
                                                  • Figure 6: U.S. real gross domestic product, Q1 2000-Q1 2013
                                                • Unemployment has improved, but still not optimal
                                                  • Figure 7: U.S. unemployment and underemployment rates, January 2007-June 2013
                                                  • Figure 8: U.S. employment to population ratio, January 2003-May 2013
                                                • Other economic factors
                                                  • There is an improvement in consumer mood
                                                    • Figure 9: Consumer confidence, May 2007-May 2013
                                                    • Figure 10: Auto and light truck sales, 2000-12
                                                    • Figure 11: Privately owned residential housing starts, 2000-12
                                                    • Figure 12: Existing home sales, 2000-12
                                                    • Figure 13: Median sale price of existing homes, 2000-12
                                                • Consumers and Household Debt

                                                  • Key points
                                                    • Incomes are back to 1990 levels
                                                      • Figure 14: Median U.S. household income, 1990-2011
                                                    • Revolving debt has stabilized
                                                        • Figure 15: Total consumer credit owned and securitized, 1/1/1943-5/1/2013
                                                        • Figure 16: U.S. revolving consumer debt, 1/1/1968-5/1/2013
                                                        • Figure 17: Composition of U.S. debt balances, housing and non-housing debt, Q1 2004-Q4 2012
                                                        • Figure 18: Composition of non-mortgage debt, Q1 2004-Q1 2013
                                                        • Figure 19: Percent of balance 90+ days delinquent by loan type, Q1 2003-Q4 2012
                                                        • Figure 20: Number of consumers with new foreclosures and bankruptcies, Q1 2003-Q4 2012
                                                      • Total household wealth has recovered, but unevenly
                                                      • Innovations and Innovators

                                                        • Key points
                                                          • Healing the mortgage market
                                                            • New credit card offers to help homebuyers, seniors
                                                              • AARP Chase Credit Card
                                                                • Chase My New Home App
                                                                  • Well Fargo Home Rebate Card
                                                                    • Reward for debit card users
                                                                      • BankAmeriDeals
                                                                        • Debit card cash back offers from Chase
                                                                          • SunTrust’s SkyMiles
                                                                            • E-Central Credit Union $20 grocery card
                                                                              • Disney Debit from Chase
                                                                                • American Express Prepaid Card
                                                                                • Marketing Strategies

                                                                                  • Key points
                                                                                    • Overview
                                                                                      • Prepaid cards
                                                                                        • Figure 21: Chase Liquid reloadable prepaid card online ad, 2013
                                                                                        • Figure 22: Magic Card from OneWest Bank email ad, 2013
                                                                                        • Figure 23: American Express prepaid stored value card email ad, 2013
                                                                                      • Debit cards
                                                                                        • Figure 24: Citizens Bank debit card direct mail ad, 2013
                                                                                        • Figure 25: PNC Purchase Payback online ad, 2013
                                                                                        • Figure 26: Visa Debit Card online ad, 2013
                                                                                        • Figure 27: Visa Debit Card online ad, 2013
                                                                                      • Payday loans
                                                                                        • Figure 28: 100DayLoans email ad, 2013
                                                                                      • Mortgages and home equity loans
                                                                                        • Figure 29: Prospect Mortgage email ad, 2013
                                                                                        • Figure 30: Northwest Savings Bank Home Equity Loan direct mail ad, 2013
                                                                                      • Educational loans
                                                                                        • Figure 31: Sallie Mae Smart Option student loan direct mail ad, 2013
                                                                                    • Consumer Optimism about Household Finances

                                                                                      • Key points
                                                                                        • Fewer state they are worse off than during and after the recession
                                                                                            • Figure 32: Attitudes about household financial situation as compared to the year prior, 2007-12
                                                                                            • Figure 33: Attitudes about household financial situation as compared to the year prior, by age, November 2012
                                                                                          • Optimism is growing about the financial future of households
                                                                                            • Figure 34: Level of optimism about household financial situation in next 12 months, overall, 2007-12
                                                                                            • Figure 35: Level of optimism about household financial situation in next 12 months, by age, November 2012
                                                                                          • Millennials more likely than others to be planning large purchases
                                                                                            • Figure 36: Likelihood of purchasing a big-ticket item in the next 30 days, by age, November 2012
                                                                                            • Figure 37: Likelihood of purchasing a medium-ticket item in the next 30 days, by age, November 2012
                                                                                        • Attitudes toward Finances and Debt

                                                                                          • Key points
                                                                                              • Figure 38: Attitudes toward personal finances (any agree), by age, November 2012
                                                                                          • Types of Consumer Debt—Overall and by Gender

                                                                                            • Key points
                                                                                              • Three in four households have debt
                                                                                                • Figure 39: Incidence of secured and unsecured debt in households, overall, April 2013
                                                                                                • Figure 40: Incidence of secured and unsecured debt in households, by gender, April 2013
                                                                                              • Secured debt
                                                                                                • Figure 41: Types of secured household debt, by gender, April 2013
                                                                                                • Figure 42: Amount of household secured debt, by gender, April 2013
                                                                                                • Figure 43: Percentage of home mortgage holders with underwater mortgages, by gender, April 2013
                                                                                              • Unsecured debt
                                                                                                  • Figure 44: Types of unsecured household debt, by gender, April 2013
                                                                                                  • Figure 45: Amount of unsecured household debt, by gender, April 2013
                                                                                                  • Figure 46: Agreement with statements about credit card behavior, credit card holders who revolve a balance, by gender, April 2013
                                                                                              • Attitudes about Debt by Gender

                                                                                                • Key points
                                                                                                  • Attitudes about personal debt situation
                                                                                                    • Figure 47: Attitudes toward personal debt situation, by gender, April 2013
                                                                                                    • Figure 48: Intentions for paying off debt, by gender, April 2013
                                                                                                  • Attitudes about debt in general
                                                                                                    • Figure 49: Agreement with attitudes toward debt, by gender, April 2013
                                                                                                    • Figure 50: Attitudes toward savings, by gender, April 2013
                                                                                                    • Figure 51: Agreement with statements about retirement savings and pensions, by gender, April 2013
                                                                                                    • Figure 52: Impact of various types of debt on ability to save for retirement, by gender, April 2013
                                                                                                  • Interest in assistance in reducing debt
                                                                                                    • Figure 53: Interest in products and services for debt reduction assistance, by gender, April 2013
                                                                                                • Types of Consumer Debt by Age

                                                                                                  • Key points
                                                                                                    • Those aged 25-44 have the most debt
                                                                                                      • Figure 54: Incidence of secured and unsecured debt in households, by age, April 2013
                                                                                                    • Secured debt
                                                                                                      • Figure 55: Types of secured household debt, by age, April 2013
                                                                                                      • Figure 56: Amount of household secured debt, by age, April 2013
                                                                                                      • Figure 57: Percentage of home mortgage holders with underwater mortgages, by age, April 2013
                                                                                                    • Unsecured debt
                                                                                                      • Figure 58: Types of unsecured household debt, by age, April 2013
                                                                                                      • Figure 59: Amount of unsecured household debt, by age, April 2013
                                                                                                      • Figure 60: Agreement with statements about credit card behavior, credit card holders who revolve a balance, by age, April 2013
                                                                                                  • Attitudes about Debt by Age

                                                                                                    • Key points
                                                                                                        • Figure 61: Attitudes toward personal debt situation, by age, April 2013
                                                                                                        • Figure 62: Intentions for paying off debt, by age, April 2013
                                                                                                        • Figure 63: Agreement with attitudes toward debt, by age, April 2013
                                                                                                      • Savings versus debt
                                                                                                        • Figure 64: Attitudes toward savings, by age, April 2013
                                                                                                        • Figure 65: Agreement with statements about retirement savings and pensions, by age, April 2013
                                                                                                        • Figure 66: Impact of various types of debt on ability to save for retirement, by age, April 2013
                                                                                                      • Interest in ways to combat debt
                                                                                                        • Figure 67: Interest in products and services for debt reduction assistance, by age, April 2013
                                                                                                    • Types of Consumer Debt by Household Income

                                                                                                      • Key points
                                                                                                        • The middle income groups are debt strapped
                                                                                                          • Figure 68: Incidence of secured and unsecured debt in households, by household income, April 2013
                                                                                                        • Secured debt
                                                                                                            • Figure 69: Types of secured household debt, by household income, April 2013
                                                                                                            • Figure 70: Amount of household secured debt, by household income, April 2013
                                                                                                            • Figure 71: Percentage of home mortgage holders with underwater mortgages, by household income, April 2013
                                                                                                            • Figure 72: Types of unsecured household debt, by household income, April 2013
                                                                                                            • Figure 73: Amount of unsecured household debt, by household income, April 2013
                                                                                                            • Figure 74: Agreement with statements about credit card behavior, credit card holders who revolve a balance, by household income, April 2013
                                                                                                        • Attitudes about Debt by Household Income

                                                                                                          • Key points
                                                                                                            • Middle income groups most stressed out by debt
                                                                                                              • Figure 75: Attitudes toward personal debt situation, by household income, April 2013
                                                                                                              • Figure 76: Intentions for paying off debt, by household income, April 2013
                                                                                                              • Figure 77: Agreement with attitudes toward debt, by household income, April 2013
                                                                                                            • Savings versus debt
                                                                                                              • Figure 78: Attitudes toward savings, by household income, April 2013
                                                                                                              • Figure 79: Agreement with statements about retirement savings and pension, by household income, April 2013
                                                                                                              • Figure 80: Attitudes toward paying secured debt vs. savings, by household income, April 2013
                                                                                                            • Interest in ways to combat debt
                                                                                                              • Figure 81: Interest in products and services for debt reduction assistance, by household income, April 2013
                                                                                                          • Types of Consumer Debt by Race/Hispanic Origin

                                                                                                            • Key points
                                                                                                              • Secured debt
                                                                                                                  • Figure 82: Types of secured household debt, by race/Hispanic origin, April 2013
                                                                                                                  • Figure 83: Amount of household secured debt, by race/Hispanic origin, April 2013
                                                                                                                  • Figure 84: Percentage of home mortgage holders with underwater mortgages, by race/Hispanic origin, April 2013
                                                                                                                • Unsecured debt
                                                                                                                  • Figure 85: Types of unsecured household debt, by race/Hispanic origin, April 2013
                                                                                                                  • Figure 86: Amount of unsecured household debt, by race/Hispanic origin, April 2013
                                                                                                                  • Figure 87: Agreement with statements about credit card behavior, credit card holders who revolve a balance, by race/Hispanic origin, April 2013
                                                                                                              • Attitudes About Debt by Race/Hispanic Origin

                                                                                                                • Key points
                                                                                                                    • Figure 88: Attitudes toward personal debt situation, by race/Hispanic origin, April 2013
                                                                                                                    • Figure 89: Intentions for paying off debt, by race/Hispanic origin, April 2013
                                                                                                                    • Figure 90: Agreement with attitudes toward debt, by race/Hispanic origin, April 2013
                                                                                                                  • Savings versus debt
                                                                                                                    • Figure 91: Attitudes toward savings, by race/Hispanic origin, April 2013
                                                                                                                    • Figure 92: Agreement with statements about retirement savings and pensions, by race/Hispanic origin, April 2013
                                                                                                                    • Figure 93: Impact of various types of debt on ability to save for retirement, by race/Hispanic origin, April 2013
                                                                                                                  • Interest in ways to combat debt
                                                                                                                    • Figure 94: Interest in products and services for debt reduction assistance, by race/Hispanic origin, April 2013
                                                                                                                • Cluster Analysis

                                                                                                                    • Cluster 1: The Stressed Out
                                                                                                                      • Demographics
                                                                                                                        • Characteristics of this cluster
                                                                                                                          • Opportunity
                                                                                                                            • Cluster 2: Young & Fancy Free
                                                                                                                              • Demographics
                                                                                                                                • Characteristics of this cluster
                                                                                                                                  • Opportunity
                                                                                                                                    • Cluster 3: Debt Hogs
                                                                                                                                      • Demographics
                                                                                                                                        • Characteristics of this cluster
                                                                                                                                          • Opportunity
                                                                                                                                            • Overview
                                                                                                                                              • Figure 95: Percentage of target clusters with debt, by type of debt, April 2013
                                                                                                                                              • Figure 96: Types of secured household debt, by target clusters, April 2013
                                                                                                                                              • Figure 97: Amount of secured household debt, by target clusters, April 2013
                                                                                                                                              • Figure 98: Percentage of home mortgage holders with underwater mortgages, by target clusters, April 2013
                                                                                                                                            • Unsecured debt
                                                                                                                                              • Figure 99: Types of unsecured household debt, by target clusters, April 2013
                                                                                                                                              • Figure 100: Amount of unsecured household debt, by target clusters, April 2013
                                                                                                                                              • Figure 101: Agreement with statements about credit card behavior, credit card holders who revolve a balance, by target clusters, April 2013
                                                                                                                                            • Attitudes about debt
                                                                                                                                              • Figure 102: Attitudes toward personal debt situation, by target clusters, April 2013
                                                                                                                                              • Figure 103: Intentions for paying off debt, by target clusters, April 2013
                                                                                                                                              • Figure 104: Agreement with attitudes toward debt, by target clusters, April 2013
                                                                                                                                            • Savings versus debt
                                                                                                                                              • Figure 105: Attitudes toward savings, by target clusters, April 2013
                                                                                                                                              • Figure 106: Agreement with statements about retirement saving and pensions, by target clusters, April 2013
                                                                                                                                              • Figure 107: Attitudes toward paying secured debt vs. savings, by target clusters, April 2013
                                                                                                                                              • Figure 108: Attitudes concerning financial situation in retirement, by target clusters, April 2013
                                                                                                                                            • Interest in ways to combat debt
                                                                                                                                              • Figure 109: Interest in products and services for debt reduction assistance, by target clusters, April 2013
                                                                                                                                            • Cluster demographic tables
                                                                                                                                              • Figure 110: Target clusters, by demographics, April 2013
                                                                                                                                            • Cluster methodology
                                                                                                                                            • Appendix – Types of Consumer Debt by Risk Score

                                                                                                                                                • Figure 111: Self-reported risk score, by gender, April 2013
                                                                                                                                                • Figure 112: Self-reported risk score, by age, April 2013
                                                                                                                                                • Figure 113: Self-reported risk score, by gender and age group, April 2013
                                                                                                                                                • Figure 114: Self-reported risk score, by household income, April 2013
                                                                                                                                                • Figure 115: Self-reported risk score, by race/Hispanic origin, April 2013
                                                                                                                                              • Secured debt
                                                                                                                                                • Figure 116: Types of secured household debt, by risk score, April 2013
                                                                                                                                                • Figure 117: Amount of secured household debt, by risk score, April 2013
                                                                                                                                              • Unsecured debt
                                                                                                                                                • Figure 118: Types of unsecured household debt, by risk score, April 2013
                                                                                                                                                • Figure 119: Amount of unsecured household debt, by risk score, April 2013
                                                                                                                                                • Figure 120: Agreement with statements about credit card behavior, credit card holders who revolve a balance, by risk score, April 2013
                                                                                                                                            • Appendix – Attitudes about Debt by Risk Score

                                                                                                                                                • Figure 121: Attitudes toward personal debt situation, by risk score, April 2013
                                                                                                                                              • Attitudes about debt in general
                                                                                                                                                • Figure 122: Agreement with attitudes toward debt, by risk score, April 2013
                                                                                                                                              • Savings vs. debt
                                                                                                                                                • Figure 123: Attitudes toward savings, by risk score, April 2013
                                                                                                                                                • Figure 124: Agreement with statements about retirement savings and pensions, by risk score, April 2013

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                                                                                                                                            Consumer Attitudes Towards Debt - US - July 2013

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