The first report studied two financial pulse points — credit
The team found:
US consumers experienced a 40% decrease in credit limit (credit card & banks) breaches from their 2011 high.
US consumers experienced a 17% increase in bank overdrafts from their 2011 high.
During the same period, new unemployment claims declined by 21%.
“Traditional economic research lacks access to high-quality, high-frequency data. We’re very excited about the Pageonce data because it provides a comprehensive view into the real financial habits of Americans,” said Dr. Steven Tadelis from UC Berkeley. “With this data, we can significantly improve our understanding of consumer spending, saving and borrowing, as well as the macro-economic policies that impact consumer behavior.”
The award-winning Pageonce Money & Bills service helps consumers track their money and pay their bill by automatically linking their financial accounts, including banks, credit cards, bills, investments and more, all from one app.
“Working with the team from Berkeley and Michigan will help us better understand how the economy impacts people’s daily lives,” said Guy Goldstein, CEO and founder, Pageonce. “Americans face real problems everyday with their money, and our goal is to use this research to help people make better financial choices.”
Signs of Improvement but Proceed with Caution
In this first study, the Pageonce economic team looked for clues of stress in people’s personal finances. The economists analyzed anonymous, aggregated financial data from Pageonce users and compared it to the number of new U.S. unemployment insurance (UI) claims, a national economic indicator.
Two “Pulse Points” were analyzed and compared to the UI claims:
1)Credit card limit breaches: Spending more than the credit limit; often signals overuse of credit cards, or inability to qualify for more credit.
2)Bank overdrafts: Spending more money than is available in a bank account; often signals a shortage of cash
By comparing the Pulse Points to new UI claims, the economic team found two important insights:
1. Less Debt Pressure: After a spike in Spring 2011, the number of Credit Limit Breaches has steadily decreased. A variety of factors could explain this positive change, including other ways to pay expenses – like a raise at work that would mean more cash on hand – or credit card companies making it easier to get credit either by issuing more cards or increasing limits.
Credit limit breaches have fallen at a rate similar to new unemployment insurance claims for the past six to nine months. However, where it looks like unemployment insurance claims have continued to decrease, credit limit breaches have not kept declining at the same rate. With credit limit breaches remaining relatively high compared to the number of new unemployment insurance claims, we must keep a watchful eye on credit usage.
2. Continued Cash Crunch: After moving up quickly in the spring and summer of 2011 alongside new unemployment insurance claims, bank account overdrafts decreased through the fall before rising again to the same levels as July 2011. This level of overdrafts could be left over from overspending during the holidays or signs of difficulty during the slow economic recovery.
Despite looking promising in late 2011 and early 2012, the increase in bank overdrafts could be cause for concern. If people are still finding themselves without sufficient cash to cover expenses, it could be a sign that the recent improvements in the job market may not be sustained through the spring.
“The Pageonce data indicate that Americans continue to experience everyday financial stress despite better job prospects,” said Dr. Daniel Silverman from the University of Michigan. “We see some encouraging signs, but we are just scratching the surface of what these data can reveal about economic conditions. We’re excited to further study the Pageonce data to better understand the trends.”
Pageonce and the economics team have a series of studies planned over the next year, to answer questions like:
How do economic stimulus efforts influence consumer spending?
Who makes bad financial decisions and why?
Why do people pay late fees?
Pageonce provided the University of California, Berkeley and University of Michigan researchers a sample of anonymous user data from March 1, 2011 to April 23, 2012. This data set includes