Fed Consumer Finance Survey Shows Increased Online Banking Usage and Higher Debt Burdens
The Federal Reserve’s most recent Survey of Consumer Finances showed an increased engagement in online banking, an attempt to grow savings, and a higher debt burden held by consumers. The pre-pandemic data showed that from 2016 to 2019, gross domestic product grew at a 2.5 percent annual rate and unemployment fell from 5 percent to 3 percent.
“The improvements in economic activity along with rising house and corporate equity prices combined to support continued increases in median and mean family net worth (wealth) between 2016 and 2019,” the Fed stated.
The median family income rose about 5 percent through 2019, to about $58,600. More than 98 percent of respondents owned a common financial asset in transaction accounts like checking, savings, and prepaid debit cards. The Fed also noted that 13 percent of surveyed families owned a business, which played a role in improved financial positions.
Increased online banking involvement led the Fed to look into whether there was a corollary decrease in physical banking services. The survey found that among families that used online banking, 79 percent still visited their checking account branch and 67 percent visited their savings account branch.
The Fed also found an increase in debt burdens from 2016 to 2019, after seeing declines from 2010 to 2016. In 2019, 12.3 percent of surveyed families made late payments, falling noticeably below the 20.8 percent experienced in 2007. Research from PYMNTS revealed that more than 59 percent of consumers live paycheck to paycheck and have less than $2,500 in savings.
Ratios such as leverage, debt to income, and payment to income “increased slightly between 2016 and 2019, implying families faced somewhat higher debt burdens,” the Fed reported. “However, these ratios remain below their levels just before the 2007-08 financial crisis.”