TD Bank announced the results of its 2023 Annual Consumer Spending Index, revealing that 4 in 5 consumers have had their spending habits affected by inflation, with more than half of them resorting to discounts and promotions (57%) and looking for lower-priced options (53%) to combat inflation.
The survey included more than 1,000 Americans to assess changes in consumer spending behaviors and credit use, and found that as inflation continues to impact all Americans, respondents prioritize rewards and show signs of high financial literacywhich underscores the importance of responsible financing during economic instability.
“Without a doubt, consumers continue to feeling the impact of inflation and rising interest ratessaid Chris Fred, TD’s director of credit cards and unsecured loans. “And it’s no surprise that so many consumers are proactively doing their homework, talking to financial professionals for accurate advice and looking for strategic ways to offset these rising costs, such as identifying more available discounts or cost-effective alternatives.”
Relevant data from the survey:
· Groceries were the main expense for 51% of respondents, and another 13% spent mainly on gasoline. Meanwhile, only 5% of consumers spend more on discretionary expenses like vacations, electronics, and high-end retail items. 39% of respondents have also cut their discretionary budget in response to the rising cost of living, and 27% have had to dip into their savings to keep up.
The vast majority of those surveyed (89%) said they would be interested in an interest-free credit cardand 42% ranked low or no fees as the feature they valued most in their card benefits, with cash back coming in second at 34%.
· More than 40% of respondents (42%) had also experienced a situation in the past that negatively affected their credit. Of this group, the main cause of the negative credit impact was incurring credit card debt (44%)which ranked even higher than losing a job or source of income (32%) as a negative credit experience.
· 83% of consumers know their credit score range and almost 50% know their exact score. Additionally, 3 out of 4 consumers can correctly identify the recommended credit utilization rate, showing high levels of financial literacy around credit scores.
· Consumers are passing this credit knowledge on to their children. Respondents with teens said that 75% of them teach the importance of building credit to their teens, and 70% are starting to help them build credit at an early age.
“Adding a teen as an authorized user on a card is a great way to help you start building a credit history earlyFred said. “We see many parents starting their teens with low-limit credit cards to start developing healthy financial habits and potentially a strong credit score early on.”
Rewards are a key factor for many when choosing a credit card, with more than 81% of respondents who own a rewards card and 31% of respondents request cards specifically because of their rewards features. Of the rewards cards, cash back cards are the most popular, with 63% of those surveyed saying they have a cash back card. However, the survey found that consumers are not using their rewards options to their fullest extent.
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