Consumers’ Financial Well-Being on the Decline: CFPB

The overall financial well-being of consumers is back to its pre-pandemic levels, which is not necessarily a good thing, according to data released yesterday by the Consumer Financial Protection Bureau, with a noticeable decline in financial health for Hispanics and individuals under 40.

A copy of the full report can be accessed by clicking here.

More than 35% of consumers who participated in the survey had difficulty paying at least one bill in the past year, compared with 40% who had difficulty in 2019. But, in 2021, the figure was at 34%. Of those who had trouble paying bills, 37% had difficulty three or four times, compared with 10% who had difficulty once and 13% who had difficulty more than 12 times. When facing major expenses and financial difficulties, consumers also had trouble paying for food, their mortgage or rent, other regular household expenses, car repairs, and their utility bills.

As the economy flirts with recession and more headlines share news of job layoffs, the financial cushions that people have built for them become more important. More than half of consumers would not be able to survive for longer than three months by relying on their savings, borrowing from friends or family, or selling their assets.

Nearly one-third of consumers experienced a “major” medical or dental expense in the year preceding their completion of the survey, while similar numbers experienced a major vehicle repair or replacement, a major house or appliance repair, or repairing or replacing their cell phone or computer. A significant number of consumers also experienced reductions in their income, either by having their hours at work cut, losing their jobs temporarily or permanently, or because they were too sick to go to work.

Collectors often try to understand an individual’s situation to help identify areas where money might be found to help repay an old debt. This report offers ideas and insights to help collectors better understand the general financial well-being of consumers and where things most often go awry.

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