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February 1, 2006 — After a brief upturn ringing in the New Year, consumer optimism has returned to pre-holiday levels, according to the most recent poll conducted by the Experian-Gallup Personal Credit Index. The initial January “rally,” which took the Personal Credit Index up to 92 (a level of not previously attained since summer 2005) has now fallen back to December's level of 85. February's seven-point dip can be partially attributed to recent increases in energy prices, as well as omnipresent fears of a bursting housing bubble threatening to sap the equity of many homeowners. February is also notable for rather steep declines in optimism among middle-class Americans, as evidenced by increasing debt concerns among 30- to 49-year-olds and families earning between $40,000 and $75,000 per year.
Twenty-three percent of the consumers surveyed responded that they made, or expect to make, New Year's resolutions having to do with finances. While this percentage may seem on the low side at first, given the seemingly never-ending struggle by most Americans to improve their financial situations, it's up from last year. Only 9% of the same respondents report making any resolutions regarding finances for New Year's 2005.
Focusing on Debt
While this month's survey results indicate that 77% of Americans are comfortable with their level of credit card debt, most consumers still plan to take steps to reduce their debt levels.
- 84% say they are likely to reduce credit card debt in 2006
- 7% have a more pessimistic outlook, believing it's "not at all likely" they'll reduce credit card debt
When it comes to reducing overall debt, consumers are a bit less confident in their abilities.
- 47% say it's "very likely" they'll be able to reduce their overall debt
- 25% think their likelihood is "somewhat likely"
- 8% claim it's "not too likely," with only 11% rating their chances as "not at all likely"
Other Steps to a More Prosperous 'O6
Concentrating on debt isn't the only way consumers plan to improve their financial situations in the coming year. This month's survey results also reveal they're prepared to make personal sacrifices and personal improvements:
- 23% are "very likely" to cut back on spending for entertainment purposes
- 20% are "very likely" to read a book or take a course on personal finances
- 19% are "very likely" to cut down on the number of credit cards they have
Complacent When it Comes to Credit Ratings?
One in four (28%) consumers is "very likely" to check his or her credit score this year, an action that does not, contrary to the erroneous beliefs of many, lower one's credit score. One in three consumers (34%) plan to take steps to improve their credit rating, with 64% of those surveyed stating they're satisfied with their current credit rating, and 1% responding that they don't even know what a credit rating is.
Among consumers who plan to improve their credit rating, achieving that goal does not appear to be a prerequisite to their happiness:
- Only 17% say their happiness is dependent upon improving their credit rating
- 52% say it's very important, but not crucial to their happiness
- 4% say it's of only minor importance
Success or Regrets?
Finally, the question on the minds of cynics everywhere this time of year: What's the likelihood of consumers actually succeeding in seeing their financial resolutions through? An impressive 89% of those who plan to make a financial resolution expect to keep it. But are their predictions overly optimistic or based on past successes? According to those who made financial resolutions last year, 82% claim to have successfully kept them, suggesting success for the vast majority. For the rest, there's always next year.
About the Experian-Gallup Personal Credit Index
The Experian-Gallup Personal Credit Index is a monthly survey among a nationally representative sample of 1,000+ respondents, focusing on consumers' ever-changing attitudes and perceptions relating to their current credit situation and future expectations. Specific areas of inquiry include debt load, credit score, borrowing, and repayment ability. The survey's margin of error is +/- 3%.
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Optimism Dips Among "Middle America"
Experian-Gallup Personal Credit Index Declines to 85
- Recent run-ups in energy prices & specter of 'Housing Bubble' disconcerting to the Middle Class.
About 1-in-4 Will Make a New Years'
Resolution to Improve their Finances in 2006
Percent of Americans Able to Keep Their New Years Resolution to Improve their Finances in 2005:
Only 28% of Americans Plan to Check Their Credit Score in 2006
% of Americans are very likely to do the following in 2006:
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