Table of Contents
Executive Summary
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- Current economic environment
- Consumers and household debt
- The consumer and attitudes toward debt
- Black consumers and debt
- Marketing strategies
- What we think
Issues and Insights
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- Social media can help lenders stem the drop in home equity lending
- The issue
- The implication
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- Figure 1: Types of debt in household – Secured debt, by visits social media websites daily, April 2014
- Look further down the credit spectrum for debt customers
- The issue
- The implication
- Frame debt-reduction services to minorities
- The issue
- The implication
Trend Application
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- Trend: Entrepreneurial Spirit
- Trend: Help Me, Help Myself
- Trend: Click and Connect
Current Economic Environment
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- Key points
- The economy continues to recover at moderate pace
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- Figure 2: Quarterly change in GDP growth, 2008-14
- Payrolls rise while unemployment rate falls
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- Figure 3: Nonfarm payrolls, 2009-14, in thousands
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- Figure 4: US unemployment rate, 2008-14
- Consumer spending and GDP growth
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- Figure 5: Real personal consumption expenditures, Jan. 1, 2000-Nov. 1, 2013
- Recovery in housing boosts household wealth
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- Figure 6: Case-Shiller 20-city home price index, 2006-14
- Figure 7: Owners’ equity in residential real estate, in millions of dollars, 2005-13
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- Figure 8: Owners’ equity in residential real estate, in percent, 2005-13
Consumers and Household Debt
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- Key points
- Total consumer loans outstanding rise nearly 4% after long decline
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- Figure 9: Total consumer loans outstanding, in trillions of dollars, 2003-14
- Mortgage debt rises 3% but still down 12%
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- Figure 10: Total mortgage loans outstanding, in trillions of dollars, 2003-14
- Mortgage growth forecast anticipates further decline
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- Figure 11: Residential mortgage originations, in trillions of dollars, 2000-14
- Mortgage delinquency rate has dropped sharply
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- Figure 12: Mortgage loan 90-day delinquency percentage, 2003-2014
- Home equity lines of credit have fallen by more than a quarter
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- Figure 13: Total home equity lines of credit outstanding, in trillions of dollars, 2003-14
- HELOC delinquency remains far above historic norms
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- Figure 14: Home equity line of credit 90-day delinquency percentage, 2003-14
- Credit card debt has dropped sharply as consumers switch to debit
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- Figure 15: Total credit card loans outstanding, in trillions of dollars, 2003-14
- Credit card delinquency rate falls to more than 10-year low
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- Figure 16: Credit card loan 90-day delinquency percentage, 2003-14
- Auto lending has picked up
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- Figure 17: Total auto vehicle loans outstanding, in trillions of dollars, 2003-14
- Auto loan delinquency has declined to three-year low
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- Figure 18: Auto vehicle loan 90-day delinquency percentage, 2003-14
- Student loan volume skyrockets
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- Figure 19: Total educational loans outstanding, in trillions of dollars, 2003-14
- Student loan delinquency soars
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- Figure 20: Student loan 90-day delinquency percentage, 2003-14
Innovations and Innovators
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- Key points
- Peer-to-peer lender SoFi helps student borrowers to refinance, find jobs
- Wells revamps HELOCs to require principal payments
- Credit scorer helps widen pool of eligible borrowers
- Walmart adds receipt comparison tool to mobile app
- Synchology, Social Money let companies offer a suite of mainstream financial products
- Discover adds free FICO scores to monthly cardholder statements
- Mobile phone app rewards users for saving and paying down debt
- MoneyDesktop tool updates as financial goals are met
- Capital One launches service to catch unwanted card charges
- Credit card issuers extend 0% interest offers to nearly two years
- Smartphone app makes it easier to transfer balances
- Wells Fargo presents video series on paying for college
Marketing Strategies
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- Key points
- Overview
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- Figure 21: Home Affordable Refinance Program from Quicken Loans direct mail ad, 2014
- Figure 22: Home Equity Credit Line from Huntington National Bank, Direct mail ad, April 2014
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- Figure 23: Home Equity Lines of Credit from Royal Bank America direct mail ad, 2014
- Figure 24: Equity-100 Program from NewDay Financial direct mail ad, April 2014
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- Figure 25: Simplicity Visa from Citibank direct mail ad, 2014
- Figure 26: Slate Visa from Chase direct mail ad, 2014
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- Figure 27: Student Loan from SoFi Lending Corp direct mail ad, 2014
- Figure 28: Smart Option Student Loan from Sallie Mae email ad, 2014
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- Figure 29: Automotive Sales from General Motors direct mail ad, 2014
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- Figure 30: Reverse Mortgage from TerraVista Mortgage, LP direct mail ad, 2014
Consumer Types of Debt in Household
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- Key points
- Mortgages, auto loans are most common secured debts
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- Figure 31: Types of debt in household, April 2014
- Age correlates with mortgages, but not auto loans
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- Figure 32: Types of Debt in Household – Secured debt, by age, April 2014
- Highest earners most likely to have mortgages
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- Figure 33: Types of debt in household – Secured debt, by household income, April 2014
- Blacks, Hispanics less likely to have mortgages
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- Figure 34: Types of debt in household – Secured debt, by race/Hispanic origin, April 2014
- Urban dwellers least likely to have mortgages
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- Figure 35: Types of debt in household – Secured debt, by area, April 2014
- Youngest most likely to have student loans
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- Figure 36: Types of debt in household – Unsecured debt, by age, April 2014
- Student loan burden falls mostly on lowest incomes
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- Figure 37: Types of debt in household – Unsecured debt, by household income, April 2014
- Blacks have more credit card, student debt
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- Figure 38: Types of debt in household – Unsecured debt, by race/Hispanic origin, April 2014
- Credit scores correlate with having a mortgage
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- Figure 39: Types of debt in household – Secured debt, by credit score, April 2014
- Lowest scored people most likely to have credit card, student loans
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- Figure 40: Types of debt in household – Unsecured debt, by credit score, April 2014
Consumer Household Financial Situation
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- Key points
- Largest group of consumers has highest credit scores
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- Figure 41: Credit score, April 2014
- Credit scores get better with age
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- Figure 42: Credit score, by age, April 2014
- Credit scores rise with household income
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- Figure 43: Credit score, by household income, April 2014
- Blacks tend to have lowest credit scores
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- Figure 44: Credit score, by race/Hispanic origin, April 2014
- Higher credit scores in suburbs, rural areas
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- Figure 45: Credit score, by area, April 2014
- Higher scores give borrowers more options
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- Figure 46: Credit score, by credit card activity and usage, April 2014
- Lowest scored borrowers not unduly stressed about their debts
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- Figure 47: Credit score, by attitudes toward personal debt situation, April 2014
- Highest scorers have more savings, better prepared for retirement
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- Figure 48: Credit score, by debt and the financial future of the household, April 2014
- Student loans a big reason why many can’t save money
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- Figure 49: Credit score, by debt and the financial future of the household, April 2014
- Most see no relief from debt in their lifetimes
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- Figure 50: Credit score, by debt and the financial future of the household, April 2014
Total Amount of Unsecured Debt
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- Key points
- Largest percentage of consumers have less than $5,000 in unsecured debt
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- Figure 51: Amount of unsecured debt, April 2014
- Youngest respondents have most unsecured debt, likely student loans
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- Figure 52: Amount of unsecured debt, by age, April 2014
- Unsecured debt equals annual income for many low earners
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- Figure 53: Amount of unsecured debt, by household income, April 2014
- Rural dwellers have more unsecured debt
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- Figure 54: Amount of unsecured debt, by area, April 2014
- Many low-scored respondents have lots of unsecured debt
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- Figure 55: Amount of unsecured debt, by credit score, April 2014
- Total amount of secured debt
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- Figure 56: Total amount of secured debt, April 2014
- Incomes correlate with secured debt loads
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- Figure 57: Amount of secured debt, by household income, April 2014
- Blacks have relatively less secured debt than Whites
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- Figure 58: Amount of secured debt, by Hispanic origin, April 2014
- West, East coasts have biggest secured debts, due to home prices
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- Figure 59: Amount of secured debt, by region, April 2014
Credit Card Activity and Usage
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- Key points
- Nearly half say they have reduced credit card debt
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- Figure 60: Credit card activity and usage – Credit card revolvers, April 2014
- Ability to manage credit card debt improves with age
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- Figure 61: Credit card activity and usage – Credit card revolvers, by age, April 2014
- Highest earners better able to reduce debt
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- Figure 62: Credit card activity and usage – Credit card revolvers, by household income, April 2014
- Blacks, Hispanics falling behind in debt management
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- Figure 63: Credit card activity and usage – Credit card revolvers, by race/Hispanic origin, April 2014
- Homeowners manage card debt better than renters
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- Figure 64: Credit card activity and usage – Credit card revolvers, by residence, April 2014
- Higher credit scores mean less debt, more happiness
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- Figure 65: Credit card activity and usage – Credit card revolvers, by credit score, April 2014
Attitudes toward Personal Debt Situation
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- Key points
- Respondents don’t stress on debt
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- Figure 66: Attitudes toward debt, April 2014
- Debt worries decrease with age
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- Figure 67: Attitudes toward debt, by age, April 2014
- Younger women more concerned than men about debt
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- Figure 68: Attitudes toward debt, by gender and age, April 2014
- Income eases debt worries
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- Figure 69: Attitudes toward debt, by household income, April 2014
- Debt burdens impact Blacks’ lives more; more Blacks are “underwater”
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- Figure 70: Attitudes toward debt, by race/Hispanic origin, April 2014
- Homeowners in better debt shape than renters
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- Figure 71: Attitudes toward debt, by residence, April 2014
- Higher credit scores mean more happiness about debt
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- Figure 72: Attitudes toward debt, by credit score, April 2014
Debt and the Financial Future of the Household
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- Key points
- Retirement outlook looks bleak for most
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- Figure 73: Attitudes toward finances and retirement saving, April 2014
- Student loans are still a burden to many approaching retirement
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- Figure 74: Attitudes toward finances and retirement saving, by age, April 2014
- Retirement picture improves with income, but not a whole lot
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- Figure 75: Attitudes toward finances and retirement saving, by household income, April 2014
- Blacks more unprepared for retirement, but optimistic about debt
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- Figure 76: Attitudes toward finances and retirement saving, by race/Hispanic origin, April 2014
- Self-employed are better prepared than most
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- Figure 77: Attitudes toward finances and retirement saving, by employment, April 2014
- Northeast, Midwest are best prepared for tomorrow
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- Figure 78: Attitudes toward finances and retirement saving, by region, April 2014
- Homeowners way more prepared for the future than renters
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- Figure 79: Attitudes toward finances and retirement saving, by residence, April 2014
- Respondents outside urban areas better prepared than city folks
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- Figure 80: Attitudes toward finances and retirement saving, by area, April 2014
- Credit card debt holding down prospects for lower scored people
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- Figure 81: Attitudes toward finances and retirement saving, by credit score, April 2014
Interest in Debt Assistance
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- Key points
- Switching to debit is most common way to reduce debt
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- Figure 82: Interest in debt-reduction products/services, April 2014
- Men more willing than women to use prepaid cards
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- Figure 83: Interest in debt-reduction products/services – Have used, by gender, April 2014
- Youngest most interested in debt-reduction tools
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- Figure 84: Interest in debt-reduction products/services – Have used, by age, April 2014
- Lowest earners more interested in debt-reduction services
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- Figure 85: Interest in debt-reduction products/services – Have used, by household income, April 2014
- Blacks, Hispanics more likely to seek debt help tools, switch to debit
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- Figure 86: Interest in debt-reduction products/services – Have used, by race/Hispanic origin, April 2014
- Renters more inclined to use debt-reduction tools than homeowners
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- Figure 87: Interest in debt-reduction products/services – Have used, by Residence, April 2014
- Low scorers more likely to seek services to reduce debt
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- Figure 88: Interest in debt-reduction products/services – Have used, by credit score, April 2014
- Youngest group more inclined to try debt tools
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- Figure 89: Interest in debt-reduction products/services – Have not used but would be interested, by age, April 2014
- Hispanics most interested in online budgeting tools, Blacks favor personal advice
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- Figure 90: Interest in debt-reduction products/services – Have not used but would be interested, by race/Hispanic origin, April 2014
- Renters more likely to seek advice than homeowners
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- Figure 91: Interest in debt-reduction products/services – Have not used but would be interested, by residence, April 2014
- Subprime borrowers most interested in debt management tools
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- Figure 92: Interest in debt-reduction products/services – Have not used but would be interested, by credit score, April 2014
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