TransUnion’s quarterly survey explores how consumers’ personal finances have changed and what changes they expect in the future. The study measures shifting consumer attitudes and behaviours based on the dynamics of income, debt and identity theft. The analyses and insights give consumers a voice and inform businesses’ decision-making as they seek to create economic opportunity for consumers.
Consumers appear optimistic
There’s no doubt pressures of the cost of living crisis are being felt by consumers across the board. Despite this, a large portion of the population appears optimistic as evidenced by findings from our latest Consumer Pulse Study. In fact, 75% of consumers felt they would have no trouble paying their current bills and loans in full.
Wages also saw some positive movement with 33% having said their incomes increased in the last three months, up from 20% in Q1 2023. A further 31% of respondents were expecting to see increases in the next 12 months.
Gen Z respondents were also notably optimistic regarding spend; 63% planned to take no action to cut back discretionary spend (e.g., dining out, travel, entertainment), and 26% said they’ll increase their in-store or online retail shopping (e.g., clothing, electronics, durable goods) spend over the next three months.
Growing wealth divide
Pressures of the cost of living crisis made it increasingly clear there’s a growing divide between those reporting high incomes (£80k or more) and low incomes (less than £30k). Among high earners, 87% reported better than or as planned household finances. In comparison, the majority (55%) of low earners reported worse than planned household finances. In terms of consumer spend, 67% of high earners were planning to maintain or increase their discretionary spend in the next three months compared to the 50% of low earners planning to cut their discretionary spend further in that time period.
When it came to preparing for a possible recession, 54% of high earners said they’re building up savings compared to just 32% of low earners. With the massive spike in home rental prices, we can see the impact will land squarely on those reporting low incomes since 40% said they currently are paying rent compared to just 15% of high earners.
Shifting credit demand
Consumers are turning to credit cards and there’s been a notable drop in personal loan demand. Of consumers who said they’re planning to apply for new or refinance existing credit in the next year, the proportion planning to apply for a personal loan dropped drastically to 19% from 36% in Q2’22.
As seen in prior quarters, credit cards were the most in-demand product; 42% of respondents planned to apply, while buy now, pay later (BNPL) was now the number two most in-demand credit product with 22% planning to apply. Interestingly, the greatest BNPL usage came from high earners; 44% reported they’ve ever used BNPL for online shopping compared to 33% of low earners.