Friday, December 23, 2022
“While there has been modest improvement in the number of Americans that are financially healthy since the middle of the summer, more than two-thirds (68 percent) of banking customers indicate that the price of goods continues to exceed their income,” the data and analytics firm stated. “And still, almost half (45 percent) of Americans age 40 and older say they have not taken steps to change their financial situation, a sign that many Americans might not be ready for what’s to come.”
Younger consumers, those under 40, on the other hand are preparing for recession. Four in 10 (40 percent) said they have reviewed what they are spending money on, and nearly one in five (19 percent) said they had revised their existing budgets to deal with rising prices. Just 5 percent of the over-40 crowd told J.D. Power they had revised their budgets.
Overall, 38 percent of Americans said they are financially healthy, while 39 percent indicated they feel vulnerable. Both numbers are basically unchanged from 2021, but better than what J.D. Power found in July, when just 30 percent of U.S. consumers said they felt financially healthy and 45 percent described themselves as financially vulnerable.
One issue most Americans can agree on is the threat of fraud and the overall security of their financial accounts.
More than half (58 percent) of consumers queried by J.D. Power had either experienced financial fraud themselves, or had a close family member experience fraud. Better than a fifth (22 percent) had experienced some form of peer-to-peer fraud, or had a family member that did. These included scams perpetrated via telephone or email, fraudulent use of a credit cards, stolen identities, and fraudulent transactions over P2P payment networks.
Consumers who are financially insecure seem to fall prey to scam artists more often than others, J.D. Power found.
Fraud on P2P payment networks, particularly Zelle, has been a hot topic in Washington in recent months. Senator Elizabeth Warren, D-Mass., issued a report in November detailing rampant fraud on Zelle, and how many defrauded customers are not being made whole by their financial institutions. The Consumer Financial Protection Bureau, which oversees compliance with consumer protection laws by digital networks, said it is working on regulatory guidance that would make clear that banks are on the hook for monies consumers lose to fraudsters on these networks.
At issue are the distinctions banks make between transactions that are unauthorized and therefore outright frauds, and those that are authorized for what later turn out to be scams. The latter typical do not qualify for reimbursement. The CFPB seems ready to change that.
J.D. Power also found that a significant number of Americans are skimping on holiday spending. “It seems an entire month of spending couldn’t have come at a worse time, and consumers are feverishly contemplating how they’re going to make some Santa magic in the face of an economic crisis,” the firm wrote.
When it comes to paying for holiday purchases, researchers found, 53 percent said they planned to use cash and debit cards, while 36 percent said they would be using credit cards for holiday purchases. Nearly one in five (19 percent) indicated their credit card usage will be higher overall than it was during the 2021 year-end holiday season. And that won’t be because of buy now pay later. The firm found only 5 percent of holiday shoppers expect to use BNPL. This conflicts with other recent reports. Research by Payments.com, for example, found that over 10 percent of Black Friday shoppers this year used BNPL to pay for purchases.
“[W]ith most banking customers relying on cash and debit cards this holiday season, and many fine-tuning their spending and budgeting, we may have begun to see the beginning of some critical behavior changes that will influence future financial health,” the company stated.
J.D. Power’s analysis is based on queries of 4,000 retail bank customers nationwide conducted in November. 
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