CHERRY
HILL, N.J., March 10,
2022 /PRNewswire/ -- TD Bank, America's Most
Convenient Bank® today released the results of its Consumer
Spending Index, which found that consumers are shifting their
spending back to experiences and in-person activities this
year.
TD's annual survey polled more than 1,000 American credit card
holders to gauge their spending habits and preferences. As
consumers return to restaurants, retailers and entertainment
venues, pent-up demand and factors including inflation may make
consumers more prone to overspending this year.
Consumers are going out, but not cashing in
As communities eased restrictions over the past year, many
people resumed spending on out-of-home activities. Dining out at
restaurants landed among consumers' top expense categories, and the
survey also found an uptick in spending on entertainment, fast food
and coffee compared to last year.
"With consumers eager to spend on the activities they enjoy, our
survey found that 41% use a debit card as their primary method of
making day-to-day purchases – despite more than 80% owning a
rewards credit card. This signals a missed opportunity to earn
valuable rewards that can help with future purchases," said
Paramita Pal, Head of U.S. Bankcard
at TD Bank. "Selecting a card that offers cash back and being
disciplined about paying it off can put money back in consumers'
pockets, which can be spent on a variety of purchases, from dining
out to traveling or purchasing groceries."
Looking ahead, more than a third of consumers (34%) say they are
most looking forward to spending on travel in 2022, followed by
home improvement (22%) and new technology (15%).
Old habits and new dynamics fuel overspending
The shift to pre-pandemic habits may also be driving consumers'
inclination to overspend. The percentage of consumers who report
overspending on dining out at restaurant and bars tripled compared
to 2021 (30% vs. 10%). While consumers did not report overspending
on entertainment purchases such as movies or concert tickets last
year, 10% now say this is an area where they over-indulge.
Shopping remains the primary reason people overspend, with over
half (54%) admitting to this. While most people are still more
likely to go overboard when shopping online, consumers who
attribute overspending to shopping in-person more than doubled from
12% in 2021 to 29% in 2022, with many citing getting distracted by
other items in the store and the ability to have items immediately
instead of waiting for shipping as the primary motivators.
Consumers may also be inadvertently spending more on routine
expenses due to inflation. Groceries, the top spending category in
TD's survey, experienced a price increase of 7.4% year-over-year in
January, according to the Bureau of Labor Statistics.
"A variety of factors are hitting household budgets, so it's
more important than ever for consumers to be vigilant about
tracking their spending and using credit responsibly," said Pal.
"And don't leave money on the table. Nearly a quarter of rewards
cardholders surveyed said they have let their rewards expire,
primarily because they forgot about them. Smart spenders take
advantage of card programs that make redeeming cash or points easy,
and don't have expiration dates for rewards."
In TD's survey, consumers reported spending an average of
$320 on groceries each month. At this
spending rate, a consumer would earn about $77 per year if they exclusively grocery shopped
with a card offering 2% cash back on purchases – enough to cover a
weekly trip to the grocery store.
Balancing the Buy Now, Pay Later boom
One way consumers are making purchases more manageable is by
using Buy Now, Pay Later (BNPL) solutions. According to the survey,
almost a third of consumers (31%) have used BNPL to finance a
purchase, including 45% of millennials. Of those who have used
BNPL, nearly half (47%) say they use it more now than they did a
year ago and a majority (81%) anticipate they will use BNPL in the
next 12 months.
"Buy Now, Pay Later can be a useful tool for making big
purchases more accessible and budget-friendly by allowing consumers
to spread payments over weeks or months," says Mike Rittler, General Manager, Retail Card
Services, Personal Lending and Business Development at TD Bank.
"But like any form of borrowing, it's important that consumers
fully understand the repayment terms and schedules, so they avoid
building up debt, paying unnecessary interest and spending beyond
their budget."
Rates on the rise
Interest rates are a key consideration for some cardholders,
with nearly a quarter (23%) saying a low interest rate is the
credit card feature they value the most. It's expected that the
Federal Reserve will raise interest rates this year, which would
impact credit card holders who revolve a balance from month to
month – 44% of cardholders in TD's survey.
"While rising interest rates have gotten a lot of attention,
it's important that consumers understand the actual impact to their
credit card bill," adds Pal. "For example, if the target interest
rate increases by 25 basis points, a cardholder with a $5,000 balance who makes just their minimum
monthly payment may only pay a couple additional dollars in
interest each month. That said, we recommend consumers pay off
their balance in full each month to avoid interest charges and any
negative impacts to their credit score."
Consumers can find best practices for managing a credit card
responsibly on TD's Financial Education Hub.
Methodology
ENGINE surveyed 1,007 Americans 18 years of age and older who
had at least one credit card. The online survey was conducted
Feb. 2-6, 2022.
About Engine
ENGINE is a global, full-service media and marketing
services company that empowers clients to outperform in the present
and win in the future with its vast range of marketing solutions
including insights, creative, media, data and
technology. Founded in 2005, ENGINE has global headquarters
in New York and 16 offices across North America, the UK,
Europe and Asia-Pacific. Find out more
at enginegroup.com and follow @engineworldwide.
About TD Bank, America's Most Convenient
Bank®
TD Bank, America's Most Convenient Bank, is one of the 10
largest banks in the U.S., providing more than 9.7 million
customers with a full range of retail, small business and
commercial banking products and services at more than 1,100
convenient locations throughout the Northeast, Mid-Atlantic, Metro
D.C., the Carolinas and Florida.
In addition, TD Bank and its subsidiaries offer customized private
banking and wealth management services through TD
Wealth®, and vehicle financing and dealer commercial
services through TD Auto Finance. TD Bank is headquartered in
Cherry Hill, N.J. To learn more,
visit www.td.com/us. Find TD Bank on Facebook
at www.facebook.com/TDBank and on Twitter
at www.twitter.com/TDBank_US and www.twitter.com/TDNews_US.
TD Bank, America's Most Convenient Bank, is a member of TD Bank
Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services
company in North America. The
Toronto-Dominion Bank trades on the New
York and Toronto stock
exchanges under the ticker symbol "TD". To learn more,
visit www.td.com/us.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/td-survey-reveals-a-return-to-pre-pandemic-spending-habits-could-fuel-overspending-this-year-301500098.html
SOURCE TD Bank