Making Ends Meet: Who is Paying the Price? A Summary of the 2024 Equifax Financial Health Report
In the dynamic world of finance, understanding the intricate patterns of consumer behavior and financial health is pivotal. Equifax, a global data, analytics, and technology company, alongside its subsidiary TDX Group, delves into these patterns in their 2024 Financial Health Report. This report, titled "Making Ends Meet: Who is Paying the Price?", leverages data and insights from millions of consumer interactions to provide a comprehensive overview of the financial state of the nation.
Equifax stands out in the financial landscape for its ability to transform vast data into actionable insights, aiding decisions that propel individuals and businesses forward. TDX Group, the Debt Services Division of Equifax, excels in managing debt resolution, ensuring ethical and optimised collections that focus on fair outcomes. Together, they possess a unique vantage point, drawing on data from over two million consumer conversations to infuse their reports with both statistical and human insights.
This report is crucial for professionals in the financial sector who are well-acquainted with consumer vulnerability. While the concept of vulnerability is constant, the environmental factors affecting it are ever-evolving. Thus, staying informed about these changes is essential for delivering effective and compassionate outcomes for clients. The Equifax report offers an invaluable, up-to-date perspective on the nation’s financial health, backed by some of the most robust data sources available.
Key Findings of the Report
1. Consumer Resilience Amid Challenges
Despite ongoing economic pressures, consumers have shown remarkable resilience. Wage growth outpacing inflation has been a contributing factor. However, this stability is not without its risks.
2. Rising Credit Utilisation
There has been a 10% increase in the number of people using at least 90% of their available credit on active credit cards. This trend suggests growing financial strain among consumers.
3. Mortgage Term Extensions
A significant shift is observed in the mortgage market, with mortgages extending over 36 years now accounting for 10% of the market. This indicates that consumers might be deferring the impact of mortgage shocks, potentially creating future financial stress.
4. Increased Engagement with Debt
Positively, there has been a 10% rise in the number of people engaging with their debt over the past year. An impressive 92% of these individuals expressed a wish that they had engaged with the collections process earlier, highlighting the potential for Earlier interventions in the debt process.
5. Depleting Pandemic Savings
Net withdrawals from current accounts suggest that the savings accumulated during the pandemic are nearly exhausted.
6. Rising Credit Card Debt
Total outstanding credit card debt has been on a steady incline since late 2021, with a notable 10% rise in 2023 alone. This surge underscores the increasing reliance on credit among consumers.
7. Persistent Gender Financial Disparities
The report highlights enduring gender financial disparities. Women face a gender pay gap that affects their financial stability, taking longer to pay off debts despite having lower balances compared to men. Additionally, there are significant gaps in savings (38%) and pensions (35%) between genders.
Valuable Insights and Actionable Strategies
The report also includes expert opinions from various financial sector stakeholders, such as Furness Building Society, Laybuy, Utilita, Policy In Practice, StepChange, and more. These insights provide a holistic view of the financial landscape and the challenges consumers face. Moreover, Equifax and TDX Group outline pragmatic steps they are taking to address these issues, leveraging their data and expertise to foster better financial health outcomes.
In conclusion, the Equifax 2024 Financial Health Report sheds light on the resilience and challenges within the consumer financial landscape. It emphasises the importance of continuous engagement and proactive management of financial health, providing valuable insights for both consumers and industry professionals.