2023 FinHealth Spend Report Finds Fees and Interest on Non-Mortgage Financial Services Skyrocket 14% to $347 Billion

New research from Financial Health Network documents the real cost to Americans of rising interest rates and expanding post-pandemic credit balances

CHICAGO, June 20, 2023 (GLOBE NEWSWIRE) -- The FinHealth Spend Report 2023, released today by the Financial Health Network, the leading voice on financial health, documents soaring fees and interest paid on a wide range of financial services – including credit, transaction, and account services – by Americans over the last year. Analysis finds that spending jumped more than $40 billion in 2022 to reach an estimated $347 billion, with likely factors including persistent inflation, rising interest rates, and a growing number of households turning to credit as post-pandemic-era savings levels continue to evaporate.

Data suggest the primary driver of this year’s increases are general purpose credit cards, which saw massive growth in credit card balances coupled with rising interest rates. Increases in total interest and fees were also seen across a number of other credit product categories, including unsecured installment and auto loans.

Particularly concerning, data show that Financially Vulnerable households and households of color are carrying a disproportionate burden of these interest and fees and are increasingly turning to higher cost alternative credit products. Specifically:

  • Financially Vulnerable households spent 14% of their incomes on interest and fees compared to 1% for the Financially Healthy.
  • Black and Latinx households had to allocate greater percentages of their incomes towards interest and fees (7% and 5%, respectively, compared with 3% for White households).
  • Payday, rent-to-own, and title loan usage all jumped among Black households.

Taken together, these findings suggest that Black and Latinx households are disproportionately struggling in the face of a challenging economy, and that the burden of an increasing cost of borrowing will continue to fall on those who are less likely to be able to afford it.

“While some might label these findings as a return to normal, the reality is that rising costs of daily life and reductions in financial cushions established during the pandemic are squeezing American households and pushing them back towards expensive credit as a source of liquidity,” said Jennifer Tescher, founder and CEO of the Financial Health Network. “These outsized impacts of interest and fees translate into real added suffering for families already struggling to get by. As financial services providers, policymakers, and advocates, we must all do more to improve access to affordable financial services.”

Additional key product trends:

  • A bright spot - unbanked levels continue to decline
    • Overall, the unbanked level among survey respondents declined from 5.6% in 2021 to 3.8% in 2022.
    • Despite this inclusion, stark disparities remain: The unbanked population is disproportionately composed of populations of color and households earning less than $30,000.
  • Credit card spending soars
    • Total interest and fees from balances carried from month to month on general purpose credit cards grew more than 20% in 2022, reaching an estimated $113.1 billion. This increase reflects both elevated card balances and higher variable interest rates.
    • Nearly half of Financially Vulnerable cardholders (46%) hold more than $5,000 in credit card debt, far higher than Financially Healthy cardholders.
  • Buy Now, Pay Later highest for households of color
    • According to survey data, 14% of households used a pay-in-4 Buy Now, Pay Later (BNPL) service. This includes 24% of Black households, 18% of Latinx households, and 11% of White households.
    • One of the core concerns around BNPL is that consumers may engage in “loan stacking,” or taking multiple BNPL loans simultaneously. Data suggests that loan stacking may indeed be taking place: A third of users (33%) say they had used BNPL twice or more in the month prior to the survey.
  • Use of higher cost alternative credit products increases after years of decline, particularly among Black consumers
    • Our analysis projects that total interest and fees paid by consumers for several alternative credit products increased in 2022, following years of decline.
    • Use of rent-to-own, refund anticipation checks, title loans, and payday loans all rose among Black households.
    • Use of refund anticipation checks and title loans rose among Latinx households.
  • Overdraft revenue continues to decline as more banks reform policies
    • In 2022, overdraft/non-sufficient funds (NSF) fees generated $9.9 billion in revenue – a 6% decline when compared to our 2021 revenue estimate of $10.6 billion. The figure is even more pronounced when compared to the 2019 pre-pandemic estimate of $15.5 billion.
    • Large institutions (banks with assets of $1 billion or more) have experienced declining overdraft fee revenue year over year since 2019. While fee revenue in 2022 for smaller banks (assets under $1 billion) and credit unions remained lower than pre-pandemic levels, we project that revenue ticked upward over the past year. This finding suggests that larger banks have taken more active steps in reforming their overdraft policies, compared to smaller institutions.
    • Our recent deep-dive into overdraft fees finds that many households report overdrafting on small-dollar transactions ($50 or less). For more insight into consumer overdraft trends, read the full brief.
  • Interest from private student loans top federal totals
    • With the student loan moratorium in place for all of 2022, total interest and fees for federal student loans remained far below pre-pandemic levels - an estimated $7.8 billion in 2022, compared with $28 billion in 2019.
    • Private student loan interest and fees ($9.1 billion) outpaced those from federal loans, despite comprising just 7% of all student loan balances.

“Our analysis shines a spotlight on the true cost of financial services for average Americans,” said Meghan Greene, senior director, Policy and Research at the Financial Health Network. “Our deep dive into the data reveals how consumers grapple with the economic pressures of this time, coupled with broader insights into ongoing trends and opportunities. While it is reassuring to see the rate of the unbanked declining, it is concerning that certain segments of the population continue to disproportionately bear the costs of participation in America’s financial system.”

“This year’s report shows concerning growth in Americans’ dependence on credit with meaningful increases in the use of high-cost, non-bank credit services,” said Sarah Keh, vice president, Inclusive Solutions at Prudential. “Most alarming, and something we are particularly committed to addressing, are the disparities by race and financial health status. As an industry, we need to really dig into this data and ask ourselves – are we doing enough to identify and provide opportunities to support more equitable financial health policies and products?”

This edition of the report marks the 11th in the FinHealth Spend series overall, and the third under a new methodology, which pairs extensive secondary research with a nationally representative survey on consumer spending. This year survey data collection was adjusted from November to January to allow us to better capture financial product use over the prior calendar year. Also new to this year’s report is the presentation of three year estimates on product spending and use that show trends since the beginning of the pandemic; early insight into topics including P2P payment services, BNPL, and earned wage access; and expanded analysis of tax refund services.

In addition to this annual report, the Financial Health Network is releasing supplemental pieces throughout the year exploring critical or emerging topics related to financial product usage and financial health impacts. In March 2023, the Financial Health Network’s first-ever piece on cryptocurrencies was released, and in June 2023 it produced an issue brief centered on usage and attitudes towards overdraft. Future analyses leveraging 2022 data may include insurance and investment products and BNPL.


About the Financial Health Network
The Financial Health Network is the leading authority on financial health. We are a trusted resource for business leaders, policymakers, and innovators united in a mission to improve the financial health of their customers, employees, and communities. Through research, advisory services, measurement tools, and opportunities for cross-sector collaboration, we advance awareness, understanding, and proven best practices in support of improved financial health for all. For more on the Financial Health Network, go to www.finhealthnetwork.org and follow us on Twitter at @FinHealthNet.


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