By: Joe Gillen
Of the large number of day-to-day concerns most people face, many of these stressors are related to their personal finances. In recent years, Americans have become more frugal and attempted to cut down on debt and build their savings. However, unemployment rates, mortgage issues, the payroll tax increase and, most recently, the sequester, have weighed on individuals and made it challenging for them to improve their financial condition.
The National Foundation for Credit Counseling and Network Branded Prepaid Card Association released the results of their 2013 Financial Literacy Survey, and found that insufficient savings accounts were high on Americans' list of concerns. According to the results, 57 percent of respondents were concerned about their savings accounts, with 43 percent worried about not having enough "rainy day" savings for an emergency. Roughly one in four respondents also expressed concerns that their spending had become excessive.
"While consumers moving out of recession mode and becoming more comfortable with spending is positive for the nation's economy, they need to be mindful of the fact that increasing spending without a safety net in the form of savings could have a negative impact on their personal economy," said Susan Keating, president and CEO of NFCC.
Helping customers get to a better financial position
Many large financial institutions fail to offer the products that can help consumers get a stronger hold on their finances and discipline their spending. However, smaller banks and credit unions continue to offer products that offer value. For example, local institutions should encourage their customers to rely more heavily on cash products tied to rewards checking accounts to both meet their spending needs, avoid debt and earn cash-back rewards. Many large banks have done away with rewards programs and instead offered credit cards, some of which impose high interest rates. Rewards checking allows customers to discipline their spending while still earning cash that can be used for everyday purchases.
Lastly, many credit unions and community banks offer more favorable interest rates on savings products, such as high-yield accounts and certificates of deposit, than large banks. By promoting the cost-saving potential of these accounts, they may sway more customers to utilize these beneficial products.
Many consumers are unaware that these products still exist, making it important that banks devote more resources toward promoting their most lucrative services and accounts.