Inflation and rising interest rates continue to
impact financial stability of many regional consumers, causing
changes to financial behavior, while presenting opportunities for
others
Nearly four in 10 regional residents (38%) are spending more
money now compared to last year, while only 21% in the region are
saving more, according to a Money Trends study from WSFS Bank, the
primary subsidiary of WSFS Financial Corporation (Nasdaq: WSFS).
Half of respondents have heard of but never used savings tools like
certificates of deposit (50%), while 51% said the same about
high-yield money market accounts, signaling an opportunity for
consumers to use higher interest rates more to their advantage.
Rising costs and inflation topped the list of why consumers are
spending more (72%), followed by paying for emergency expenses such
as repairs or medical bills (27%), paying off more debt (23%) and
rising interest rates on credit cards and loans (23%).
The study, which surveyed 1,043 Greater Philadelphia and
Delaware region consumers, measured spending and saving trends and
the impact of economic conditions among adults ages 18-55.
Continued Economic Headwinds
Inflation and rising interest rates continue to have a major
impact on regional consumers, with 72% spending more this year
attributing it in part to rising costs and inflation.
When looking at spending categories, rising costs for essentials
have left consumers’ wallets stretched thinner, with consumers
spending more on groceries (60%), transportation (53%), utilities
(50%) and housing (43%) than last year.
“While continued economic headwinds have impacted many
consumers, there are adjustments you can make to help your money
stretch further,” said Shari Kruzinski, Executive Vice President,
Chief Consumer Banking Officer at WSFS Bank. “Some consumers are
already adjusting as they’ve reduced spending on restaurant visits
(42%), entertainment (34%), and travel and vacations (34%) from
last year. While prices for essentials like groceries may have
increased, you can still search for savings by looking for
discounts from big box or discount retailers and eating at
home.”
Changing Spending Habits
The current economic climate has resulted in regional consumers
making changes to their spending behaviors to combat increased
prices and rates.
Thirty-seven percent of regional consumers are slashing
non-essential expenditures due to rising interest rates. The uptick
in rates has motivated 30% of residents to reduce their credit card
spending and debt, while an equal percentage are steering clear of
loans altogether.
Two-fifths of respondents (38%) are using their debit cards more
than last year. In contrast, while 30% of respondents increased
their credit card usage, an almost equal 26% reduced it. Among
those using credit cards less, 37% are focused on repaying existing
debt, while others are wary of high credit card interest rates
(33%) or are better able to stay on budget by using credit cards
less (31%).
“Changing your spending habits can be difficult, but there are
small things you can do that add up in a big way over time,” said
Shelly Kavanagh, Senior Vice President, Director of Retail Delivery
at WSFS Bank. “Taking a close look at your online and mobile
banking can be a great way to quickly analyze your spending habits
and adjust, like cutting unused subscription services or searching
for better bargains on your regular purchases. It’s also important
to monitor how you use credit and products like buy-now-pay-later
carefully to avoid overextending yourself.”
While many consumers are pulling back financially, Gen Z (47%)
led the way in increased spending compared to last year, outpacing
Millennials (38%) and Gen X (30%). Gen Z, more than other
generations, points to increased income (31%) and financial
stability (29%) as leading reasons for spending more this year.
Refining Saving Techniques
Saving has become more challenging this year for many in the
region, with half of residents (50%) saving less now than they did
the previous year.
Of those saving more this year, 40% cited having specific
savings goals as the reason why, while many are also driven by a
desire to prepare for potential financial emergencies (39%) and to
ensure future financial stability (36%).
Half of regional residents have heard of but never used
certificates of deposit (50%), money market accounts (53%),
high-yield savings accounts (47%) and high-yield money market
accounts (51%). If they received an unexpected $10,000 to save or
invest for a year, 34% of regional respondents said they would
place it in a basic savings account, while 30% would deposit some
or all of it in a checking account, underscoring many consumers’
unfamiliarity with higher-yield savings tools.
“Rising interest rates have certainly made it more difficult to
save, but the good news is it creates the opportunity to earn more
on your savings through certificates of deposit (CDs), money
markets and high-yield money markets than there has been in quite
some time,” said Kruzinski. “These savings tools tend to offer a
higher interest rate than standard savings accounts and provide a
safe way to earn interest that can really add up in this
challenging economy. Setting specific goals is also a great way to
keep yourself on track financially. If you feel you need more
assistance, schedule an appointment with your local banker, who can
help you map out your goals and how you will achieve them.”
Survey Methodology
The study was conducted by research company Opinium. The sample
includes 1,043 respondents in the Greater Philadelphia and Delaware
region who reside in five southeastern Pennsylvania counties
(Bucks, Chester, Delaware, Montgomery and Philadelphia), four
southern New Jersey counties (Atlantic, Burlington, Camden and
Gloucester), and all three Delaware counties (Kent, Sussex and New
Castle). All respondents were ages 18-55. The online survey was
conducted from August 10-17, 2023, with a margin of error of +/- 3
percent.
About WSFS Financial Corporation
WSFS Financial Corporation is a multibillion-dollar financial
services company. Its primary subsidiary, WSFS Bank, is the oldest
and largest locally-headquarter headquartered bank and trust
company in the Greater Philadelphia and Delaware region. As of June
30, 2023, WSFS Financial Corporation had $20.4 billion in assets on
its balance sheet and $67.9 billion in assets under management and
administration. WSFS operates from 114 offices, 88 of which are
banking offices, located in Pennsylvania (59), Delaware (39), New
Jersey (14), Virginia (1) and Nevada (1) and provides comprehensive
financial services including commercial banking, consumer banking,
treasury management and trust and wealth management. Other
subsidiaries or divisions include Arrow Land Transfer, Bryn Mawr
Capital Management, LLC, Bryn Mawr Trust®, The Bryn Mawr Trust
Company of Delaware, Cash Connect®, NewLane Finance®, Powdermill®
Financial Solutions, WSFS Institutional Services®, WSFS Mortgage®,
and WSFS Wealth® Investments. Serving the Greater Delaware Valley
since 1832, WSFS Bank is one of the ten oldest banks in the United
States continuously operating under the same name. For more
information, please visit www.wsfsbank.com.
About Opinium, Inc.
Founded in 2007 Opinium is an award-winning strategic insight
agency built on the belief that in a world of uncertainty and
complexity, success depends on the ability to stay on the pulse of
what people think, feel and do. Creative and inquisitive, the
Opinium team is passionate about empowering clients to make the
decisions that matter. Opinium works with organizations to define
and overcome strategic challenges – helping them to get to grips
with the world in which their brands operate. It uses the right
approach and methodology to deliver robust insights, strategic
counsel, and targeted recommendations that generate change and
positive outcomes.
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version on businesswire.com: https://www.businesswire.com/news/home/20230913313698/en/
Media: Kyle Babcock (215) 864-1795
kbabcock@wsfsbank.com
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