Credit Card Delinquencies and Card Over Limit Increased by 14% in Q1 2023 from Q1 2022
A consumer sentiment survey on spending and summer plans by ScoreSense®, a credit score monitoring product, revealed that about half of American consumers are enduring financial stress and are canceling or postponing summer vacations. Most consumers polled indicated they are cutting expenses across all areas, including dining out and entertainment. Many respondents said they had used personal loans to help pay for groceries (48%), utility bills (47%), rent and mortgage (42%), and car maintenance and vehicle fuel (both 41%). Nearly one in five respondents do not have an emergency fund, while 58% of respondents have enough to cover six months or less.
The survey coincides with ScoreSense’s Q1 2023 Market Report, which revealed delinquencies (30 days or more overdue) and Card Over Limit both increased by 14% in Q1 2023 from Q1 2022. New inquiries, when customers apply for credit and their banks pull credit reports, went down 10% in Q1 2023 compared to Q1 2022.
“We’re really starting to see the worst effects of many months of staggering inflation and rising interest rates beating up consumers’ home budgets with people falling behind on bills and changing plans for vacations and major purchases,” said Carlos Medina, senior vice president at One Technologies, LLC., which offers ScoreSense. “We’re seeing fewer people apply for loans, an indicator that consumers are postponing major purchases, and some may be struggling with their current credit lines. For those who have a negative credit standing, it’s also less likely that a lender would give them a new account or give them attractive interest rates for an account.”
A consumer survey by ScoreSense, focused on consumer spending and future spending plans, revealed:
- 72% of respondents are either somewhat or very concerned about a possible recession this year, especially those ages 64 and older.
- 48% of respondents feel financially stressed, primarily due to inflation and higher prices.
- 50% of respondents are canceling or postponing vacation trips due to financial challenges, while 1 in 3 respondents plan to spend less on expensive vacation locations.
- 53% of respondents planning a vacation this summer intend to spend less than $2,000. This is especially apparent among respondents who do not have children (69%) compared to those with children (31%). Older respondents were more likely to spend less than $2,000 on summer trips compared to younger respondents.
- 65% of respondents say they are eating out less than last year. Those older than 45 are spending less on eating out compared to those in younger age groups.
- In addition to dining out less often, people are also spending less on entertainment (46%) and clothing (44%).
- 55% of respondents are using coupons, and 57% are buying on sale as a money-saving strategy. 48% are buying store brand instead of name brand products. This strategy is more apparent in those ages 45 and older compared to those under 45. Females are more likely to buy secondhand products compared to males.
- Overall, 38% of respondents are canceling or postponing purchasing a vehicle this year due to financial challenges; among those with children, 43% say they will postpone a vehicle purchase. Those between the ages of 25-34 were more likely to postpone purchasing furniture than consumers in older age brackets.
- About one in five respondents are using Buy Now, Pay Later (BNPL) for electronics or clothing. Males were more likely than females to use BNPL for electronics. Those in younger age brackets also were more likely to use BNPL for purchases compared to older respondents.
- Within our sample, 36% of respondents will be dealing with federal student loans. Of those dealing with the loans, 37% will resume payments without any help from others, 29% will need help from others to pay, and 34% will be helping their child/relatives/friends make loan payments.
About One Technologies
One Technologies, LLC, harnesses the power of technology, analytics, and its people to create solutions that empower consumers to make more informed decisions about their financial lives. The firm’s consumer credit products include ScoreSense®, which enables members to seamlessly access, interact with, and understand their credit profiles from all three main bureaus using a single application. The ScoreSense platform is continually updated to give members deeper insights, personalized tools and one-on-one customer care support that can help them make the most sense of their credit. One Technologies is headquartered in Dallas and was established in October 2000. For more information, please visit onetechnologies.net.