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October 1, 2005 — One of America's worst natural disasters on record, and sky-high gas prices resulting from the storm's destruction, have consumers behaving conservatively on matters of credit. The Personal Credit Index remains essentially unchanged, with only a minor jump to 78-up one point from last month's record low of 77.
Disaster headlines and extensive news coverage haven't done much to inspire consumer confidence, either. Both present and future ratings of consumer expectations are down, with the Index's present dimension coming in at 31 (down 10 points from March's benchmark level of 41), and the future dimension down 12 points to 47.
While ubiquitous news coverage of Katrina revealed a clear lack of preparedness on federal, state, and local levels, the results of this month's survey indicate much of the general public is also unprepared for a major disaster. Asked how prepared they are for a disaster the magnitude of Katrina…
- 23% say they are not at all prepared
- 18% say they are not too prepared
- 43% say they are somewhat prepared
- 15% say they are very prepared
Emergency Essentials
The majority of Americans are prepared when it comes to having the basic items to help them through an emergency on hand.
- 95% have flashlights, and 85% have batteries
- 90% have food, and 71% have bottled water
- 77% have a portable radio
- 73% have a first-aid kit
When it comes to emergency financial matters, however, the numbers aren't quite as strong. Two in three (65%) Americans say that they have their credit card and bank account numbers, as well as other important financial information, all together in one place. Only 51% of the population has an emergency fund to see them through should their income suddenly cease, with 69% of those having cash at their immediate disposal. Of those with cash on hand, only 27% have $1,000 or more.
Financing an Emergency
It can be a long time before any disaster or insurance money reaches the hands of disaster survivors. So how do Americans plan on financing their emergencies? According to the survey:
- 75% would use their savings account
- 56% would use credit cards
- 50% would borrow money from a family member
- 39% would dip into their 401K retirement account
- 37% would use their home equity account
Not Bankrupt on Compassion
Finally, even though bankruptcy laws have hardened, the hearts of most Americans have not. Two in three citizens surveyed say that people who lost their homes to Hurricane Katrina should be allowed to file for bankruptcy more easily than the laws allow.
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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Personal Credit Index Remains Crestfallen Post-Katrina
Now at 78, Experian-Gallup Personal Credit Index Remains Near its All-Time Low
- Mirrors many Americans' inability to make payments and maintain their creditworthiness - especially in the aftermath of Hurricane Katrina.
- Consumer sentiment is also negatively affected by continued concern over gas prices & inflation.
Where Would Americans Get Money if Disaster Struck?
% of Respondents Who Would Consider Getting Money From Each Source in an Emergency
Differences Over Bankruptcy Protection for Homeowners in Katrina's Path
% of Respondents Who Believe Those Losing Homes to Katrina Should Be Allowed to File Bankruptcy More Easily
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