US consumers’ financial health is trending slightly upward. Nearly one-third (32%) of respondents are financially healthy, while 44% fall into the vulnerable category. These are the most encouraging levels observed by JD Power since August 2023. Even as conditions improve, 25% of customers say they have paid a credit card late fee in the past year. Unsurprisingly, this level is higher among financially unhealthy customers.
When asked how much they paid, 73% said the fee was more than the proposed $8 late fee cap. More than half (59%) of customers view the proposal to cap late fees as at least somewhat helpful, with 23% considering it to be very helpful. Younger customers, and those who are financially unhealthy, are the most likely to see the cap as a benefit. Even though this proposed legislation could help some bank customers, most are unaware of it. Two-thirds (67%) said they have not heard of this proposed change. And even once they do hear about it, many customers doubt it will come to fruition. More than half (52%) of all respondents say they do not believe this change will take effect this year.
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The fraud factor
As customers await changes on late fees, they still face issues with fraud on their bank accounts and credit cards. Nearly one-fourth (22%) believe their risk of fraud has increased during the past 12 months. Older customers are more likely to believe they are more susceptible.
Customer ratings of both their bank and card issuer security protections have declined across all key metrics since June 2023. Overall, customers with healthy financial situations and those under 40 years old are more likely to rate their bank or card issuer’s security higher.
Building awareness
As customers begin a slow climb back toward better financial situations, many are still living in a precarious financial state. Receiving a large late fee on a credit card or falling victim to fraud could take a customer on the precipice of a healthier financial outlook and plunge them back into a vulnerable state. As programmes from governmental or in-house bank or credit card programmes focused on tamping down late fees or bolstering security enter the marketplace, institutions will need to build awareness. It’s possible that even a small piece of aid could make a major difference.
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By GlobalData
