Western Union Finds US Consumers Expressing Cautious Optimism

The Index reveals encouraging insights into how Americans have taken the reins of their finances by cutting back on non-essential spending and sticking to reasonable budgets. Overall, three out of four (75 percent) consumers are cutting back on spending and increasingly looking for bargains by shopping more at discount (59 percent) and second-hand stores (31 percent).

With these money management strategies, Americans’ financial stress dropped 13 percent since the Q1 2009 Index (48 percent vs. 61 percent), and their financial confidence has jumped ten percent (56 vs. 46 percent), as they report being more prepared to manage their finances. More than half (62 percent) of Americans have been successful at sticking to their budget and 36 percent expect their financial situation to improve, an eight percent increase compared to the previous quarter’s survey.

However, the Index shows mixed emotions from consumers about credit scores: 63 percent believe they are accurate, but 56 percent believe they are biased and unfair. About one in four (23 percent) haven’t seen their credit score, and that indifference is more pronounced among people ages 18-24 – nearly half (49 percent) have never seen their credit score. In addition, about one-third (29 percent) of those surveyed do not believe they are in control of their credit scores and do not understand what factors determine whether they are approved for a loan or credit card.

Further, consumers’ bill payment behaviors have not improved since Q1 2009, as consumers continue to pay an average of 3.1 bills late. Those consumers paying credit card bills late or missing credit card payments report increases in interest fees. These activities, coupled with the lack of understanding of credit scores, could hinder their credit standing.

“It’s certainly a positive sign that consumers are making steps to improve their finances and feel better about their financial situation, but paying bills late – even just a handful – can have a long-term impact,” said David Shapiro, senior vice president, Western Union Global Payment Services. “Consumers should balance their improved money-saving strategies with timely bill payment strategies that best meet their financial situations so they can also maintain or increase their credit scores.”