Credit Card News: Consumer Credit Index Rises

Posted On: June 1, 2005

The latest Experian-Gallup Personal Credit Index shows that consumers’ confidence in their personal credit is growing. &nbsp&nbsp However, four in ten have no emergency fund in case their income is halted, and another 18 percent could not last beyond three months.

The Personal Credit Index is now at 94, close to the March (2005) introduction of 100 and up two points from its plunge two months ago. &nbsp&nbsp Last month, the Personal Credit Index rose only four points, but it has continued to climb this month.

Ed Ojdana, group president of Experian Interactive, said:

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“The increase this month comes mostly from more optimistic feelings consumers have about the future. &nbsp&nbsp They are feeling more positive about being able to pay their bills now and in the future. &nbsp&nbsp If this continues and consumers are better able to pay their bills on time, this could be very promising for the economy.”

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Also, the Experian-Gallup survey shows that 46 percent of consumers have had a financial hardship that is ‘very’ or ’somewhat’ serious because of price increases in gas and oil. &nbsp&nbsp Also, 41 percent of consumers report a hardship because of a more general rise in prices, and 24 percent are experiencing hardship because of higher interest rates.

Dennis Jacobe, chief economist for The Gallup Organization noted:

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“Declining pump prices are clearly one of the reasons consumers are feeling more positive about the future. &nbsp&nbsp Even today’s lower gas prices, however, are creating financial hardship for many consumers.”

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The Experian-Gallup survey also asked consumer about being ready for a financial emergency. &nbsp&nbsp The survey shows that many consumers are not prepared for financial emergencies, with 41 percent of consumers not having any emergency fund, should they suddenly find themselves without an income. &nbsp&nbsp Another 18 percent say that have an emergency fund, but it would not last beyond three months.

Of the consumers who do have an emergency fund:

42 percent say they have money in the bank or in a savings account.
20 percent say they have an investment portfolio.
10 percent say they have CDs or money market accounts.
9 percent say they have stocks and bonds.

Jocobe also said:

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“Consumers should be aware of the importance of an emergency fund because if they had a sudden loss in income they could potentially lose their home, car and/or other belongings that will not only have an immediate effect on their lives, but could also have a long-term effect on their ability to borrow in the future.”

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The Experian-Gallup Personal Credit Index is a monthly survey among a nationally representative sample of 1,000+ respondents, focusing on consumers’ sentiment relating to their current credit situation and future expectations. For more information about the Experian-Gallup Personal Credit Index, please visit http://www.PersonalCreditIndex.com

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