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CU System
How will tax rebate impact lenders
CHICAGO, Ill. (2/15/08)--The tax rebates included in Congress' economic stimulus package will impact consumers' spending and saving, but it will also affect the economy and credit lenders, according to a new study. In the survey commissioned by credit bureau TransUnion, 42% of consumers surveyed said they would pay down debt if they received a tax rebate. Another 20% would save the money. But 21% would spend it, with 16% of those saying would buy something they considered necessary and 5% indicating they would splurge. How does that stack up to consumers' behavior during with past stimulus packages from 2001 to 2003? Ezra Becker, TransUnion's principal consultant in financial services, checked TransUnion's Trend Data database--a quarterly snapshot of 25 million consumers randomly sampled. The trends led to the conclusion that after those rebates, consumers still were relying on credit and some continued to have credit problems after a temporary relief. The trends noted were:
* Consumers saved little with the 2001 government stimulus check and instead spent it or paid down past-due debt; * Third-quarter 2001 saw the highest percentage--less than 3%--of consumers who were 60 days past due on bank cards. That percentage dropped to 2.4% during second-quarter 2002 and then increased to more than 3% during first-quarter 2003. * The average balance of bankcards that were 60 days or more past due dropped significantly in third-quarter 2001. Some of the stimulus refund check could have gone to pay down credit debt (averaging under $1,600). After the decrease during that quarter, however, the average balance of cards 60 days or more past due continued to increase--to more than $2,200 during fourth-quarter 2003. * The average balance of new bankcards dropped slightly from third quarter 2001 to fourth quarter. Consumers were paying down balances but started a steady climb until leveling off in early 2003. The average daily balance of new bankcards increased. That means consumers continued to rely on credit.
TransUnion's TrueCredit.com survey was conducted by Zogby International. The online survey of 3,036 adults was conducted Jan. 30 to Feb. 1. Its margin of error is +/- 1.8 percentage points.
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