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Smarter Spending and Saving: Evolution in U.S. Consumer Behavior

By Prasad Iyer

After a brief period in 2010 when both the Credit worthy and the Credit on the Edge segments began to engage in a higher level of spend on consumer goods, more Credit Worthy consumers stated that they were focusing on saving for retirement. The Credit on the Edge cohort reached a point of equilibrium. They needed their 2011 income—as well as a portion of their 2010 savings and some debt—to fund current living expenses. Both segments used a combination of credit, debit, and increasingly, prepaid cards, to achieve these goals.

In other words, the changes in behavior, discernible since the beginning of the crisis in 2008, have reached the point where the remarkably resilient U.S. consumer has internalized the crisis’s lessons. Smarter spending and savings include:

  • Optimizing household cash flows as U.S. consumers become more focused on long-term financial goals and less concerned about short-term fluctuations.
  • Actively maximizing value by managing liquidity, selectively utilizing debt, and capitalizing on rewards and returns to achieve long-term financial goals.
  • Optimizing spending rather than retrenchment as consumers gain confidence in their ability to achieve their goals.

Selecting payment methods more deliberately, both with regard to when and where to use credit, debit, or prepaid and which program provides the greatest value.

1. 2012 MasterCard Global Prepaid Market Sizing Study

P2P is the largest cash displacement opportunity; monthly bills are the largest check displacement opportunity
Percent of Consumers Using Cash or Checks for Specific Types of Expenditures

Source: Target Research Group, Financial Crisis Study, December 2008, February 2011, and February 2012.