Industry: Banking

As we approach the end of the year, the major storylines that have developed in the credit card industry are creating ripple effects through the entire financial landscape.

Even as inflation dropped to its lowest level since February 2021, customers are still trying to find their footing and they are leaning on their credit cards to help.

Using data from the JD Power 2024 U.S. Credit Card Satisfaction Study we have identified the biggest trends in the credit card industry this year and analyzed how customers are behaving in response to these trends. From late fees to card delinquencies to revolving card debt, here are three issues set to define the year ahead.

The Spirit of the Late Fee Cap            

This past March, the Consumer Financial Protection Bureau (CFPB) announced that it would be capping credit card late fees at $8 per occurrence. The news came as a welcome sign for customers. In the spring, 25% of credit card customers told JD Power that they had paid a late fee in the past 12 months, and 73% of those had paid more than $8.

But in May, the American Bankers Association (ABA) and U.S. Chamber of Commerce filed a legal challenge and a federal judge agreed, which blocked the CFPB’s plan to curb fees. The cap could be resurrected. In September, Former President Donald Trump made a campaign promise that, if elected, he would support a cap on credit card interest rates.

While the spirit of the rule seems consumer friendly, it’s worth noting that neither the late fee nor interest rate cap proposals would immediately affect the majority of U.S. cardholders. Only 18% of U.S. cardholders say they have paid more than an $8 late fee, and 24% of cardholders report having an interest rate above 10%. It’s likely these numbers are larger, as most cardholders don’t know such pricing details about their credit cards and may not be aware of even benefitting from such policy caps. Still, some think the policy will resonate with customers and as an early mover gesture. Notably, PNC and Wells Fargo have already begun reducing credit card late fees.

As is often the case, when one issuer finds success in a strategy, others follow. Keep an eye out for more issuers offering late fee caps to try to build goodwill with their existing customers while enticing new ones.

Are Card Delinquencies Really on the Rise?

While high consumer prices and inflation fatigue may make it seem like credit card payment delinquencies are on the rise, JD Power data finds that the level of revolving card debt and card late payment fees is flat year over year.

That said, cardholders do say they are having a harder time being able to pay their bills—credit card or other—on time now than they did in 2023 (ability to pay fell to 4.26 in 2024 vs. 4.29 in 2023 on a 5-point scale). While some brands are seeing their customers’ ability to pay bills on time fall significantly, brands with more financially healthy[1] customers and that have a single product focused on credit building are seeing improvements.

As issuers find more ways to attract desirable customers, some may opt to narrow their focus and tailor their marketing strategies to customers that are actively looking to consolidate or pay down their debt. Look for issuers to try to build awareness for their debt management tools as well, hoping to build engagement and bolster customer awareness and education.

Rich in Miles

After years of pent-up travel demand during the pandemic, customers are once again taking to the skies, and they’re doing so in record numbers. But after airline rewards credit cards came under attack at a May CFPB hearing, some analysts wondered if customers are actually racking up big credit card debt just to accrue airline miles.

According to JD Power data, 40% of airline cardholders have revolving debt, which is significantly below 51% all card average. Airline cardholders are also significantly more financially healthy (61% vs. 46% all card average) and are much more likely to say that their debt is completely manageable. Of course, there are exceptions, but by and large, airline cardholders tend to manage their finances relatively well.

It makes it clear why smaller carriers have an issue with bigger brands that can offer airline card miles: these types of customers are extremely attractive and they’re drawn to this perk. And while that may make it difficult for smaller carriers to compete in the marketplace for customers, it also places an onus on companies to find a way to match that kind of value proposition and offer a service that is as attractive as discounted airfare.

Finding the Opportunity

As issuers take appraisal of the developments of 2024, the experiences of the past 12 months offer a roadmap to new strategies for 2025. The marketplace is moving in a new direction, and a new breed of customers are prioritizing different things. How they are interacting with their credit cards, and what they hope to gain from a relationship with an issuer should influence these next steps.

Issuers that can digest this information and meet customers where they are will not only reap the benefits of increased customer loyalty and retention, but they will become more attractive in a very competitive marketplace.

Find out More

This Banking and Payments Intelligence Report is based on responses from 38,852 credit card customers nationwide and was fielded from June 2023-June 2024. It was authored by John Cabell, managing director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Mr. Cabell or to learn more about the underlying research.

 

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

 

[1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

Banking and Payments Intelligence Report
December 2024

The holidays have arrived, and with them the annual surge in consumer spending. But against the backdrop of the highest jump in consumer prices in seven months, and with many bank customers in the United States still reeling from the past two years of inflation, there are some big financial health concerns to contend with this holiday season. Are the nation’s banks up to the task of helping their customers through this challenging time? Many bank customers feel they are not. 

According to JD Power data, 20% of customers say their bank does not offer any emergency services to support them during their challenging times, while only 36% feel completely confident that their bank provides financial education resources to help them manage their finances effectively.

With customers stretching their spending to meet the demands of the season, this puts the onus on banks to boost awareness around their emergency products to give their clients some peace of mind.

Financial Health Remains Stagnant                                                        

The number of customers who are financially healthy[1] decreased slightly in November to 31%, while 44% of bank customers fall into the vulnerable category. These levels have remained largely consistent for the bulk of 2024.

 

The number of bank customers who say the cost of goods is increasing faster than their income actually dropped slightly to 65%. Overextended customers saw a slight increase to 53%, while stressed customers dropped to 80% from 83%.

Bank Backup?

Amid this period of widespread economic uncertainty, it seems that many banks have struggled to instill confidence in their customers. Just 35% of customers say that their bank will completely help protect them against economic fluctuations, while 17% said banks will not protect them at all. Financially vulnerable customers and those over 40 years old were least likely to agree that banks would protect them.

To address concerns like these, many banks and financial institutions have introduced emergency support services, such as payment assistance programs. However, only 33% of bank customers completely agree that their banks offer emergency support services, such as micro-loans, lines of credit and fee waivers, while 20% say their bank does not offer any help at all.

 

Customers are also dismissive of the notion that their banks empower them to meet life’s financial challenges. Just 31% completely agree that banks empower them, while 12% said not at all. More than half (57%) say somewhat, which implies there are customers in the middle that can be won over. 

 

The Battle for Trust

If banks made an impression on customers during the era of 7% inflation, it certainly fails to resonate today. Many institutions built out huge awareness campaigns around emergency support services like fee waivers, but it’s clear that not all customers received the message. That means that banks need to go the extra mile now to win the hearts and minds they failed to on the first go-round.

No matter the economic conditions, customers’ financial health can ebb and flow throughout the year, and regardless of what the economic headlines say about topline inflation and economic recovery, many customers are still struggling with financial health. If banks can show the same kind of investment in helping customers out in an emergency before another tough stretch happens, it may resonate more than when customers are simply trying to keep their heads above water.    

Find out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in November 2024. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

 

[1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

With inflation down from last holiday season and the U.S. Transportation Security Administration (TSA) having reported record-setting travel records this past Labor Day weekend, it seems the stars are aligned for a blockbuster holiday travel season. 

But according to JD Power data, bank customers in the United States aren’t necessarily readying to take to the roads and the skies in droves for the holidays this year. In fact, more customers say that they will remain home for the holidays this year than in 2023. 

That development may come as a surprise to some, with customers presumably having gained some financial breathing room during the past few months. And for those who will travel, 70% will travel by air and/or stay overnight. But with customers suffering from the fatigue of persistently high consumer prices, some are just content to forego traveling altogether.

 

Financial Health Remains Steady                                

The number of customers who are financially healthy¹ increased slightly to 33%, while 44% of bank customers fall into the vulnerable category. Notably, these levels reflect year-over-year improvements, which may imply a slightly higher holiday spending budget.

 

The number of bank customers who say that the cost of goods is increasing faster than their income held steady at 67%. Overextended customers saw a drop from 55% to 51%, potentially another harbinger of increased customer spending.

 

A Tame Turkey Day?

As Thanksgiving draws closer, bank customers have relatively modest holiday plans. The number of customers who say they will not travel during the holiday season increased to 46% from 39% a year ago. These levels are highest among vulnerable and stressed customers, as well as those over the age of 40.

Among those who do plan to travel, 43% say they plan to stay overnight in a hotel, motel, bed and breakfast, or an inn, while 27% say they plan to travel by air to their destination, 24% say they plan to stay at an overnight short-term rental, and 16% plan to rent a car. This implies that those who do travel are likely to spend a significant amount on their travel. This is particularly true of overextended and customers under the age of 40.

 

Holiday Helpers

After years of pent-up travel demand that accumulated during the pandemic, some customers are being more prudent about how and when they travel for the holidays. Still, there’s a big sentimentality to walking into your childhood home for Thanksgiving dinner. For those who do decide to take a trip in these next few weeks, banks can be valuable partners in guiding their travel spending.

Overextended customers are more likely to travel for the holidays than healthy customers, which means that budgeting tools could be a huge area of focus for banks even before the Black Friday shopping begins. Banks that can be active participants in helping customers make wiser travel decisions will likely be rewarded by thankful customers who will have a bit of a nostalgic hangover in the form of the reality of holiday shopping.

 

Find out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in October 2024. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

 

[1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

With banking satisfaction among small business decision-makers reaching new heights, banks are capitalizing on fresh opportunities to support and grow their relationships with these important customers. In this episode of JD Power Monthly Intelligence Update, Paul McAdam, Senior Director of Banking and Payments Intelligence and Miles Tullo, Managing Director of Financial Services, share the latest insights from the JD Power 2024 Small Business Satisfaction Study and why satisfaction is trending up.

Small Business Sentiment: Their Banks

Paul McAdam explains, “Small businesses are feeling good, with a significant improvement in satisfaction for the second consecutive year. They’re especially appreciative of the increased client-centric, proactive, and personalized service they’re receiving.”

According to our recent study, small business satisfaction is on the upswing, driven by:

• Client-Centric Service: Banks are placing greater emphasis on personalized, proactive support.
• Improved Credit Access: Steady credit availability is empowering small business growth.
• High Retention Rates: Business owners are more likely to return for future services, a positive indicator of satisfaction.

Renewed Energy in Small Business Banking

There’s renewed interest in small business banking on both sides—banks and clients alike. Banks are increasingly looking at this line of business for growth, motivated by:

• Rise in New Startups: Post-pandemic, the rate of small business startups has remained robust.
• Dual Relationship Benefits: Small businesses often bring personal accounts with them, blending retail and business banking for deeper partnerships.

Top Performers in Small Business Banking

The 2024 U.S. Small Business Banking Satisfaction Study measures satisfaction based on seven key factors: trust, staff, convenience, account offerings, time and cost savings, digital channels, and issue resolution. The study reflects feedback from 6,976 small business owners or financial decision-makers using business banking services.

These banks are ranked the highest based on their Overall Satisfaction performance:

1. Capital One 
2. Chase
3. Regions Bank
4. Huntington
5. Bank of America

See the full rank chart here.

Building Lasting Relationships in Small Business Banking

While small business banking satisfaction is on the rise, there are still crucial areas for banks to address. Proactive communication is essential as businesses seek guidance on saving money and managing fees amidst rising costs. Relationship managers are increasingly important, with satisfaction levels rising this year, but digital tools are also vital for providing ongoing support. Curious about how banks can tackle these challenges and enhance the customer experience —watch the full video now.

Where can you find more insights like this?  

The JD Power Small Business Satisfaction Study evaluates small business owners’ satisfaction with leading financial institutions. It uncovers opportunities for banks to enhance their support for small businesses in today’s market and beyond. The insights from this study highlight which banks excel in managing small business relationships and the reasons for their success. This study is available in both the U.S. and Canada.

READ THE LATEST PRESS RELEASE – US

READ THE LATEST PRESS RELEASE – CA

 

More About These Experts 

Paul McAdam is a Senior Director of Banking and Payments Intelligence at JD Power. Clients rely on his expertise to gain a better understanding of how to improve the customer experience, with a particular emphasis on the regional banking segment. His research at JD Power has led dozens of research programs that have enabled leading U.S. banks and global financial technology companies to quantify market demand and measure customer experience.

Miles Tullo is the managing director of the JD Power Financial Services team. He oversees client engagement for the Financial Services Practice in North America and recently led the development and launch of the JD Power U.S. Consumer Point of Sale Payment Program. Drawing from over 20 years of experience in banking, payments, and mortgage lending, Miles brings valuable expertise to clients.

Inflation isn’t the only stressor for bank customers in the United States. Data breaches have emerged as a big concern, and the National Public Data breach (NPD) is only bound to exacerbate those worries.

Nearly nine in 10 bank customers are worried about personal information data breaches. It’s an alarmingly high number, and it may be set to move even higher, as 44% of customers are currently aware of the NPD breach.

Banks can take heart in the fact that most customers who are aware of the breach did act to protect their identity, but they may be failing to properly educate their customers on their exposure risk. Just 50% of customers say they received an alert from their financial partner about their data being compromised.

Financial Health Stays Stagnant
        
The number of customers who are financially healthy  declined slightly to 31%, while 45% of bank customers fall into the vulnerable category.

The number of bank customers who say that the cost of goods is increasing faster than their income decreased slightly (67%). Notably, stressed customers did see an increase to 84%, from 82%.

Data Privacy Starts Becomes a Top Concern

While inflation worries have begun to dip, a new customer stressor has reared its head: data breaches. An alarming 88% of bank customers are worried about personal information data breaches—a fear that spans all financial health status and age. That is despite that only 44% are aware of the NPD breach that some estimates say may have affected up to as many as 2.9 billion people.

Among those aware of the breach, 61% acted swiftly to confirm whether they were personally affected. Healthier customers are more likely to have acted, but age does not appear to make a difference in response. Troublingly, though, only 50% of those aware say they received an alert from a financial institution.

The good news is that customers are checking their credit scores with greater regularity than their credit reports. Nearly half (48%) of all customers have checked their score in the past month, with the highest levels among older and financially health customers. 

Locking Down the Data

With inflation levels low enough to temporarily tamp down customer concerns about the cost of goods, data breaches have taken the mantle as a pressing issue. But banks do have it within their power to be key partners in helping customers avoid becoming victims of identity theft.

Customers—particularly those under the age of 40 and those in poor financial health—need guidance from informed partners on how they can help lock up their personal data. That includes offering the best advice on how to monitor their credit, the difference between the credit reports and scores, how to effectively freeze their credit, and what warning signs they should be looking for along the way. Financial partners that can engage by customers will likely establish vital bonds of trust and will benefit from more customer loyalty and higher levels of engagement.

Find out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in September 2024. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts
Brian Jaklitsch; East Coast; 631-584-2200; [email protected]
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]
 

Inflation is the bugaboo that just won’t go away. As the U.S, Presidential election hits a fever pitch, the persistently high cost of consumer goods is a huge talking point among the candidates and the voters.

That may be surprising to some, as the rate of inflation finally dropped below 3% this summer and, at its current 2.5%, represents a 73% drop from the 9.1% high that was reached in June 2022. But according to JD Power, the percentage of bank customers in the United States who are financially healthy[1] has only modestly improved, while the number of customers who say the cost of goods is increasing faster than they can afford has increased in the past month.

It’s a fact that is difficult to reconcile, leading some analysts to wonder just how reliable some customer feedback is. Notably, 28% of customers say they do not track their own financial status, leaving banks with the uphill task of building products and offering services to a clientele that is often in the dark about their actual situation and needs.

Inflation Becomes the Ultimate Enigma

The number of customers who are financially healthy rose slightly to 32%, while 44% of bank customers fall into the vulnerable category.

For the first time in four months, the number of bank customers who say that the cost of goods is increasing faster than their income increased (68%). That rise comes amid the lowest inflation numbers in recent memory.

Relief Hard to Come By, But Lack of Tracking Breeds Confusion

When asked about where they have experienced relief from inflation, customers express modest improvement from six months ago. Grocery and restaurant prices show the most improvement, but shockingly, 34% of customers say prices have not gone down for any goods. Those rates are highest among financially stressed and vulnerable customers, but even 30% of healthy customers say they have not felt any relief.

Even as customers continue to express struggles, there seems to be a disconnect between what customers feel and what they actually know. While some customers are using either banking digital tools or a personally made system, a surprisingly high 28% of customers admit that they do not track their finances with any digital tool or other system.

A Need for Clarity

Even with inflation easing, it is clear that customers are not feeling immediate relief. After being under duress for more than two years, financial health improvements are likely to lag inflation’s downward trend. That means that inflation is still a factor in many Americans’ day-to-day financial decisions.

For banks, this creates an interesting dilemma. With so many customers making choices, both financial and political, based on inflation, yet such a sizeable portion of them refusing to track their finances, it is difficult to build an outreach strategy. Banks will need a multi-pronged approach that incorporates financial literacy, vigilance, and planning to help customers out of the cycle of stress that they’ve been experiencing.

Find out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in August 2024. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

[1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

Customers Growing More Optimistic about Potential of AI in Financial Services, But Skepticism Remains

It seems that financial services customers are technologically optimistic at heart.

While forecasts of artificial intelligence (AI) integrations often bring a gloom and doom, man vs. machine, dystopian dynamic, it seems that customers generally are encouraged at the prospect of further implementation of generative AI (GenAI) tools and solutions at their respective banks. To get a sense of just how optimistic they are, JD Power surveyed more than 2,000 financial services customers in the United States about their utilization and opinions of AI.

According to JD Power, 54% of all customers say they have used some version of a generative AI tool, and 32% say they have a complete understanding of AI. That level of comprehension and adoption has fueled a largely positive view of the technology, as 50% of customers are optimistic that AI will at least somewhat enhance their lives.

But an undercurrent of skepticism still exists, as customers can’t shake concerns about security, an increased risk of fraud, and loss of human support. The good news is that these fears provide financial institutions with a roadmap toward broader adoption for their AI solutions.

 AI Usage Rises, But Trust Issues Persist            

The use of AI chatbots among customers is on the rise. Overall, 54% of customers say they have used a GenAI tool. That level is significantly higher among national bank customers (66%) than regional banks (42%). Unsurprisingly, chatbot usage is higher among customers under the age of 40 (72%). 

When asked how confident customers feel about using AI chatbots for specific purposes, just 27% of customers said they trust AI for financial information and advice. When compared with other categories of advice, this ranks lower than travel information (37%), but slightly ahead of medical information (25%).

 

Understanding the Tech

Some of the above hesitation undoubtedly comes from a lack of understanding of how GenAI solutions work. Despite this tech becoming increasingly common, there is a widespread lack of comprehensive knowledge about GenAI. While most customers have used GenAI, just 32% of customers claim to possess a full understanding of AI solutions, a rate that is highest among those under 40 years old.

While customers are confident that AI tools will provide some added convenience, they are a lot more skeptical about the positive impacts to their financial situation. While 72% of customers agree or strongly agree that AI tools will provide easy, convenient self-service in the near future, only 42% believe AI will improve personal finances. The difference highlights an important gap for financial services firms to close.

Finding the Opportunity

Customers are most likely to be receptive to personalized alerts and recommendations that can help them, but many are wary of allowing AI to control the actions and the application of personal security measures.

Nearly two-thirds (62%) of bank customers say they would immediately try AI-driven personalized account alerts to help avoid service charges and fees, 44% would use automated phone voice assistants to resolve a customer service problem, and 42% would take personalized product recommendations from an AI agent.

Given the fact that customers are clearly open to AI tools, the onus is on financial institutions to communicate to their customers a clear understanding of how AI works and its benefits. These solutions can help customers and banks forge a symbiotic relationship to improve workflows and bolster personalized advice and alerts, but there must be buy-in from the customer to make that happen. By getting insights into how and when customers are most likely to use AI, banks can tailor their outreach accordingly. Those that do it well stand to win big with customers, both new and existing.  

Find out More

This Financial Services Intelligence Report is based on responses from 2,001 financial services customers nationwide and was fielded in April 2024. It was authored by Ila Ghosh, senior director of financial services intelligence at JD Power. Please contact us at the numbers below to connect with Ms. Ghosh or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

This month, we’re diving into the results of our flagship U.S. Credit Card Satisfaction Study. With insights from over 39,000 cardholders across 283 cards and 19 major issuers, this study reveals key trends shaping the credit card industry. Miles Tullo, Managing Director of Financial Services and John Cabell, Managing Director of Payments Intelligence, discuss the widening gap in satisfaction between revolvers and transactors. 

A Widening Divide

According to the results of the 2024 U.S. Credit Card Satisfaction Study, the satisfaction gap between credit card revolvers and transactors is wider than ever. “While there has always been a difference, this year we saw a dramatic shift,” John Cabell notes. Those who manage to stay financially healthy continue to enjoy their rewards cards and benefits. Meanwhile, those grappling with debt are facing increasing dissatisfaction as interest rates, fees, and account terms become more critical factors in their overall experience.

What Does This Mean for Issuers? 

The implications for credit card issuers are clear: financial health isn’t just a consumer issue; it’s a business imperative. As dissatisfaction grows among financially stressed cardholders, issuers must refine their strategies. Offering support that goes beyond standard customer service, particularly around managing interest charges and fees, can make all the difference. The focus should be on proactive financial health support, which has long been a gap in the credit card industry.

The Path Forward 

For issuers, this year’s results are a wake-up call: Consumer satisfaction is a moving target, and the credit card industry must continue to evolve to meet the changing needs of cardholders. The study highlights that satisfaction varies significantly depending on cardholder priorities:

• For Revolvers: Account terms, such as credit limits, interest rates, and fees, dominate as top concerns. With financial pressures mounting, these cardholders are more likely to feel the pinch of their credit card’s terms.
• For Transactors: Rewards remain a key driver of satisfaction. Interestingly, benefits like free FICO score tracking have seen a surge in both awareness and usage, helping to boost satisfaction among this group.

Get the complete breakdown of this year’s study by watching the full video.

Watch the Full Video

Where can you find more insights like this?  

The JD Power U.S. Credit Card Satisfaction Study is the most comprehensive and independent survey of credit cardholders available. Designed to help both consumers and issuers, it provides valuable insights into satisfaction ratings for the largest credit card brands. The study establishes a quality benchmark for personal card issuers and delivers a deep understanding of customers’ needs, expectations, and preferences at both the brand and product levels.

Read the press release

More About These Experts

John Cabell serves as the Senior Director of Banking and Payments Intelligence at JD Power, where he leads strategic direction and oversees the execution of our credit card studies. With over 25 years of experience in customer experience (CX) across the banking, payments, and mortgage industries, John brings deep expertise to his role. He holds an MBA from the Raymond A. Mason School of Business at William & Mary and a bachelor’s degree in Economics and French from the Virginia Military Institute.

Miles Tullo is Managing Director of Financial Services at JD Power. He oversees client engagement for the Financial Services Practice in North America and recently led the development and launch of the JD Power U.S. Consumer Payment Program. Drawing from over 20 years of experience in both payments and mortgage lending, Miles brings valuable expertise to clients.  
 

With the inflation rate in the United States stubbornly stuck around 3%, more bank customers are trying to find ways to manage the higher cost of goods, even if their overall financial health[1] has not necessarily improved.

According to JD Power, the percentage of U.S. bank customers who are financially healthy has remained steady, but the overall level of concern regarding inflation has fallen sharply. This implies consumers are finding workarounds for higher consumer prices.

Unfortunately for banks, it seems that customers are finding these workarounds without the benefit of using the personal financial management tools they’ve developed to provide this type of guidance. Customers say they find these tools clunky and hard to interpret, which represents a missed opportunity for banks to provide valuable insights to the customers that need them the most.

Financial Health Largely Flat as Inflation Concerns Wane                                           

The number of customers who are financially healthy remains steady at 31%, while 45% of bank customers fall into the vulnerable category.

For a third consecutive month, the number of bank customers who say that the cost of goods is increasing faster than their income decreased. Nearly two-thirds (66%) of customers say they are struggling to keep up with the cost of goods, which is the lowest level this calendar year by far.

Management Tools Come Up Short

As customers acclimate to higher prices, banks have tried to offer personal financial management tools for support. Unfortunately, many are finding these tools to not be particularly helpful. In fact, just 40% of customers say that they completely understand the data presented to them in their bank’s personal financial management tool. That leaves an interpretation gap for more than half of users, one that widens as financial health status declines.

When asked specifically if personal financial management tools helped teach them about their money management behaviors, just 29% said they completely understand their spending habits thanks to these tools. That rate drops to 19% for vulnerable customers.

What’s more, customers are finding these tools to be too passive. Just 39% of customers said that their bank’s management service prompts them with advice to make an immediate change to their financial activity to improve their situations, while only 36% said the tools took action on their behalf (i.e., putting more money into savings or setting up a proposed budget).

Becoming Proactive

While the easing anxiety over inflation is certainly worth celebrating, the fact that most customers’ financial health has not changed is an indication that these modest improvements may not be sustainable. Simply growing numb to higher consumer goods isn’t the same as bolstering a customer’s finances, and that’s where most banks have an opportunity to intervene.

Personal financial management tools can be a game-changing solution for customers, particularly those searching for some relief. But if the data and insights provided aren’t digestible to the customer, there is no way to make them actionable. Customers are expressing a willingness to try these tools and have clear preference on what they want them to look like. Banks must find a way to make the solutions not only easier to understand, but more proactive to help customers take key steps toward better financial health. Banks that can do this stand to build trust and forge valuable relationships with their customers.

Find Out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in July 2024. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

 

[1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

The concern about inflation among bank customers in the United States is seemingly cooling but new worries about energy costs are bubbling up with each new summer heatwave.

The average utilization rate of electricity is on the rise and, as a result, the cost of summer season cooling is set to spike. That has customers worried that their energy bills will absorb any savings they might be seeing on consumer goods.

According to JD Power, the percentage of U.S. bank customers who are financially healthy[1] has remained steady and the overall level of concern regarding inflation has begun to fall, but customers in every financial category are at least somewhat worried about the size of their energy bill.

It’s a discouraging development for customers trying to dig out of the financial holes left by the last two years, as they try to discern how they can manage both their energy consumption and their budgets in the face of unrelenting weather.

Financial Health Largely Flat as Inflation Concerns Wane               

The number of customers who are financially healthy remains steady at 30%, while 45% fall into the vulnerable category.

 

The number of bank customers who say that the cost of goods is increasing faster than their income decreased to 69%, the lowest level this calendar year.

 

Energy Tensions Rise

Just as inflation concerns have started to subside, a new worry has emerged. Nearly one-third (32%) of customers are extremely worried their energy costs will rise this summer, and 85% are at least somewhat concerned. These fears are highest among vulnerable consumers.

 

What’s more, more than half (55%) of customers say they are making daily attempts to reduce their energy usage by lowering their consumption, a rate that is highest among stressed customers (65%) and those over the age of 40 (63%). Interestingly, even among financially healthy customers, 55% say they have made daily adjustments, showing the universality of these concerns.

 

Customers have also begun to get assistance to pay for their utilities. Overall, 13% say that they have received financial assistance from the government or other organizations. The rate is highest for customers that are overextended (20%) and under the age of 40 (17%).

 

Rising Financial Temperatures

It certainly appears that just as customers have begun to get a reprieve from inflation, energy costs are here to throw everyone a curveball. But the reality is that if it wasn’t energy costs, it would be holiday shopping or travel plans or any other cyclical cost. The truth is that the financial health of customers in the United States has just not recovered yet, and that puts increased pressure on banks to help their customers manage these challenges.

While many banks are well-positioned to come to the rescue with budgeting tools, assistance programs, and a host of other solutions that are available to their customers, those solutions will only help if customers are aware of them and trust the institutions from which they are coming. It’s incumbent on the banks to communicate with their customers and proactively offer personalized help that meets their unique financial needs.

Find out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in June 2024. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

[1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

Even as the national economic indicators seem to suggest a turning of the financial tide, the majority of bank customers in the United States remain worried that consumer prices will rise in the future.

According to JD Power, the percentage of U.S. bank customers who are financially healthy[1] dropped slightly, leaving 70% of customers in some state of financial duress. What’s more, the specter of higher consumer prices seems to be looming, leaving many to wonder about their next move.

Accordingly, customers are counting every dollar out the door, and it’s put an increased demand on the budgeting and spending tools banks offer on their mobile apps and websites.

A Trend Reversal

After months of gradual improvement, the number of customers who are financially healthy dipped slightly to 30% in May 2024, while 45% fall into the vulnerable category.

The number of bank customers who say the cost of goods is increasing faster than their income decreased to 72%, but 88% are at least somewhat worried prices for goods they use every day will increase in the next three months.

Finding the Balance

With concern about high prices stubbornly persistent, customers are keeping a closer eye on their spending. Seven in 10 (72%) say that it is extremely important that their primary bank always shows an up-to-date available balance. Somewhat shockingly, 6% say that their bank’s mobile app or online banking website does not display their available balance, while 6% say they don’t know.

What’s more, 60% of customers say that their primary bank instantly updates their available balance when they make a transaction. Another 21% say it updates within a few hours, 7% say by the end of the day, while 8% say it takes the next business day. Interestingly, online-only banks do the best job of delivering up-to-date balances in a timely manner.

Customers are also increasingly open to financial aggregator tools, particularly as many have shifted funds to pursue higher yield accounts or get a loan from another institution. Three-fourths (75%) say it is useful that their bank shows the balances of their external accounts, rates that were notably high in customers under the age of 40 (88%) and among those in the overextended category (87%).

Controlling the Controllables

It is clear customers feel that some degree of their financial situation is out of their own control. They’re watching costs closely and trying to find ways to mitigate the effects of high prices with the tools at their disposal.

For banks, this means that they need to find a way to empower their customers to handle these ebbs and flows with confidence by bolstering the tools that they are working with in real time. Gone are the days where checkbooks were balanced by hand. Customers rely on the snapshot they get on their primary bank’s mobile app to be updated and comprehensive. Institutions that can do this will see fewer overdrafts and better budgeting management from their customers, which should in turn help customers seize more control over their financial health.

Find out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in May 2024. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

[1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.