The DOL’s proposed rule would close the current regulatory loopholes to ensure that all investment professionals provide advice that is in retirement savers’ best interest and that any conflicts of interest do not taint their advice. This “best interest” standard would apply across the board: to any investment professional advising on retirement accounts for any recommended investment product.

The post DOL Retirement Security Proposal Would Protect Retirement Savers From Bad Investment Advice appeared first on Consumer Federation of America.

“Based on our initial review, the DOL has drafted a strong rule that would help bring millions of retirement savers much closer to a secure, dignified retirement. This rule aims to protect workers and retirees by closing significant legal loopholes, ensuring that the retirement investment advice they receive serves their best interests rather than the self-interest of financial professionals they turn to for advice.

Among other important protections, the proposed rule covers advice about rollovers to IRAs, the most important financial decision many people will ever make. It also covers advice to retirement plans, such as 401(k)s, where savers hold a significant portion of their retirement investments. The rule also covers advice about insurance products that are not currently protected under the securities laws or are covered insufficiently under weak and ineffective state insurance laws.

This rule promises to be a major improvement over the status quo, which allows too many financial professionals and firms to offer self-serving retirement advice at the expense of retirement savers. Given the financial stakes, it’s not surprising that certain Wall Street and insurance industry allies have immediately begun attacking the rule. Despite these attacks, there are many financial professionals who already meet these standards and want to see rules in place that require high-quality retirement investment advice that is not tainted by conflicts of interest.

As the comment process moves forward, we’ll continue to evaluate all aspects of the rule to ensure it is as strong as possible. And we’ll encourage all savers to share their views with the DOL so they can finally get the unbiased retirement investment advice they deserve.”

MEDIA CONTACTS:

AARP is the largest nonprofit, nonpartisan organization dedicated to empowering Americans age 50 and older to choose how they live as they age. With a nationwide presence, AARP strengthens communities and advocates for what matters most to the more than 100 million Americans 50-plus and their families. To learn more, visit www.aarp.org. Media Contact: Colby Nelson, (202) 706-8416, media@aarp.org.

The AFL-CIO is a federation of 60 national and international labor  unions that represent 12.5  million working people.  To learn more, visit https://aflcio.org/about-us. Media Contact: Liz Vlock, (202) 637-5034, LVlock@aflcio.org

Americans for Financial Reform Education Fund is a nonpartisan, nonprofit coalition of more than 200 civil rights, community-based, consumer, labor, small business, investor, faith-based, civic groups, and individual experts.  We fight for a fair and just financial system that contributes to shared prosperity for all families and communities.  To learn more, visit www.ourfinancialsecurity.org. Media Contact: Carter Dougherty, Carter@ourfinancialsecurity.org.

Better Markets is an independent, nonprofit, nonpartisan organization that promotes the public interest in the financial markets. Better Markets advocates for reforms that stabilize our financial system, prevent financial crises, and protect investors and consumers, ultimately so that our financial system serves all Americans more equitably.   To learn more, visit www.bettermarkets.org. Media Contact:  Madeline Tucker, Press Secretary, at 202-618-6433 or mtucker@bettermarkets.org.

Center for American Progress is an independent, nonpartisan policy institute that is dedicated to improving the lives of all Americans through bold, progressive ideas, as well as strong leadership and concerted action. Media Contact: Sarah Nadeau, 603-496-9417, snadeau@americanprogress.org.

Consumer Federation of America is a non-profit association of more than 250 national, state, and local pro-consumer organizations. It was formed in 1968 to represent the consumer interest through research, advocacy, and education. To learn more, visit www.consumerfed.org. Media Contact: Micah Hauptman, mhauptman@consumerfed.org.

Economic Policy Institute is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans. To learn more, visit www.epi.org/. Media Contact: Monique Morrissey, 202-360-8526, mmorrissey@epi.org

The Pension Rights Center is a nonprofit consumer organization committed to protecting and promoting the retirement security of American workers, retirees, and their families. To learn more, visit www.pensionrights.org. Media Contact: Kate Pixley, (202) 296-3776, kpixley@pensionrights.org

The post SAVE OUR RETIREMENT COALITION STATEMENT REGARDING DEPARTMENT OF LABOR RULE TO PROTECT RETIREMENT SAVINGS appeared first on Consumer Federation of America.

“The release of this rule is a major milestone in the long fight to bring millions of Americans one step closer to a secure, dignified retirement. We look forward to reviewing this proposal in detail, submitting our comments, and working to help craft the strongest possible rule to ensure that retirement savers receive investment advice that is in their best interest, not the self-interest of the financial professionals they turn to for advice about their retirement investments. If the proposal is as strong as we have urged, this will prove to be a banner day for retirement savers.”

The post SAVE OUR RETIREMENT COALITION GROUPS APPLAUD PUBLIC RELEASE OF DEPT. OF LABOR’S PROPOSAL TO PROTECT AMERICANS’ RETIREMENT SAVINGS appeared first on Consumer Federation of America.

Long-time consumer advocate, Edgar Dworsky, a former assistant attorney general in Massachusetts, and now editor of the website ConsumerWorld.org has been tracking grocery packaging changes for decades.  Recently, Dworsky has observed that product downsizing is becoming more prevalent.  He says Kimberly-Clark’s Cottonelle Ultra Clean mega rolls of toilet paper have just been reduced from 340 sheets to 312; Keebler’s Chips Deluxe with M&Ms packages that used to be 11.3 ounces are now only 9.75 ounces, and Gatorade’s 32-ounce bottles just shrank to only 28 ounces.  A list of recently downsized products can be found here.

As America’s shopping watchdog, Dworsky is concerned, saying, “Since manufacturers are increasingly choosing to make their products smaller as a sneaky way to pass on a back door price increase, shoppers have to become net weight conscious and not just price conscious.”

“The best way to cope with ‘shrinkflation’ is to focus on unit pricing (the price per ounce or per 100-count)—that’s the only way to really compare prices and know what you’re paying,” said Gillis.  “What’s particularly insidious, is that while package contents are shrinking, package sizes often look the same—so beware.”

According to Consumer World and CFA, here are some tips for coping with “shrinkflation” and soaring grocery prices:

• Take advantage of unit pricing to truly compare and know what you’re actually paying
• Compare prices in supermarkets’ weekly flyers
• Substitute store brands for the higher-priced brand names
• Check the “day-old rack” for discounted produce and bread
• Use the store’s loyalty card to save on sale items
• Stock-up on sale items when the price is exceptionally good
• Compare the price per serving instead of just the per pound price
• Use grocery apps to get rebates on items you buy anyway

CFA appreciates the Biden Administration looking into the reasons for inflation.  “Our concern is that some companies are taking advantage of inflation and are raising prices more than they really need to.  They’re taking advantage of the pent-up consumer demand and the increase in savings balances that have been building since the pandemic began,” added Gillis.

Contacts:
Jack Gillis, CFA, 202-939-1018
Edgar Dworsky, Consumer World, 617-666-5958

The post Coping with “Shrinkflation”: Tips on Making Ends Meet as Packages Get Smaller and Inflation Carries On appeared first on Consumer Federation of America.

CFA President White has announced the formation of a Transition Committee made up of representatives of CFA’s Board, Executive Committee and staff.  “We are pleased that Jack will remain as CEO during the search for a replacement,” said White.

“During his long tenure at CFA Jack has not only been CFA’s main conduit between the organization and the media, but over the years he has led CFA’s efforts in child and product safety, indoor air quality, consumer education, auto sales practices and, most significantly, auto safety.  As a well-known consumer advocate, Gillis is author, co-author and editor of 75 consumer books including The Car Book, published for 40 consecutive years.  He served for ten years as a contributing consumer correspondent for NBC’s Today Show representing CFA, was Good Housekeeping’s personal finance columnist, and was a child product safety columnist at Child Magazine,” said White.

“Gillis’ advocacy has been responsible for major changes in the automobile industry, including significantly improved vehicle safety, better warranties, and increased fuel efficiency.  Early in his career, The New York Times featured Gillis as a leader in a new breed of consumer advocates.  He was an adjunct professor at The George Washington University, where he taught in the Graduate School of Government and Business Administration, and he currently serves on the boards of the Center for Auto Safety (chair), Advocates for Highway and Auto Safety, Center for the Study of Services (Consumers’ Checkbook) and CAPA.  Previously, he was Executive Director of the Certified Automotive Parts Association, a non-profit standard setting organization.  He received his MBA from The George Washington University where he served as a Teaching Fellow and his BA from the University of Notre Dame,” added White.

“Serving the Consumer Federation of America for all of these years has truly been an honor.  It has enabled me to work closely with some of America’s greatest consumer and safety advocates, men and women who have truly changed America for the better.  Any success that I’ve had at CFA rests squarely on the shoulders of these remarkable activists.  As it enters its 54^th year, CFA has a very exciting future ahead and I will always cherish being a small part of its distinguished history,” said Jack Gillis.

Contact: Marceline White, marceline@marylandconsumers.org

The post Jack Gillis to Retire After 38 Years at CFA – Most Recently as Executive Director appeared first on Consumer Federation of America.

The report found that over half of U.S. households now own a traditional savings account, that the incidence has increased in this century, and that deposit levels have grown as well. Between 2004 and 2019:

• The proportion of households with traditional savings accounts rose 10.6 percent – from 47.1 percent to 52.1 percent – and the increase in this period was continuous.
• The median level of deposits of households with savings accounts rose by two-thirds – from $3,000 to $5,000 in nominal dollars (the CPI increased by only about one-third in this period).

“The traditional savings account at a bank or credit union is not dying out but is becoming more widely used by consumers,” noted Stephen Brobeck, a CFA senior fellow and the report’s author.

The report used unpublished data on savings accounts that was collected by the Federal Reserve Board as part of its tri-annual Survey of Consumer Finances (SCF).  University of Utah economist Jessie X. Fan analyzed the most recent SCF data-set, which was collected in 2019 and made available in the fall of 2020.  Fan and earlier, another economist had also disaggregated SCF data on savings accounts from 2004, 2007, 2010, and 2016 for CFA. The Fed’s published data does not distinguish between checking accounts, traditional savings accounts, and money market deposit accounts, combining them into a broad “transaction account” category.

The Greatest Growth in Savings Accounts Was Among Americans Who Have Moderate Incomes and Those Who Are Under 35 Years of Age

Moderate–income households – those in the second income quintile – $26,268-$45,818 – experienced especially large increases in their use of traditional savings accounts.  From 2004 to 2019, the proportion of these households with savings accounts rose 12.4 percent – from 39.5 percent to 44.4 percent, and the median amount of those with these accounts rose 138.9 percent – from $900 to $2,150.

“As a group, all low- and moderate-income households increased their account ownership and their account levels, yet these remain at relatively low levels,” noted CFA’s Brobeck.  Less than one-third (30.2%) of households in the lowest income quintile – those with incomes below $26,268 – held a savings account in 2019, and the median amount for these households was only $1,010.

Between 2004 and 2019, households in the top tenth income group ($192,712 and over) experienced a significant decline in account ownership – 59.7 percent to 54.4 percent – but a huge increase in median deposits – from $12,600 to $31,900.  These figures can be explained in part by substantial increases in their incomes and also by their increased use of money market deposit accounts (MMDAs), which pay higher interest rates than traditional savings but impose stiff fees for not meeting high minimum balance requirements.  In 2019, two-fifths (40.1%) of top tenth households held an MMDA.

Households headed by someone under 35 years of age also experienced especially large increases in ownership and levels of traditional savings.  Between 2004 and 2019, ownership levels rose 12.7 percent – from 48.1 percent to 54.2 percent, while the median amount of those with these accounts rose 150.1 percent – from $1,000 to $2,501.

At an ownership rate of 48.1 percent, those 65 years and over were less likely to own a traditional savings account in 2019 than were other age groups.  However, from 2004 to 2019, this account ownership grew 18.5 percent – from 40.6 percent to 48.1 percent – and deposit levels for those with accounts increased by 90.0 percent – from $5,000 to $9,500.

Why the Relatively High and Growing Popularity of Savings Accounts?

Why do more than half of U.S. households hold a traditional savings account while nearly three-fifths (58.0%) own a savings account and/or an MMDA?  CFA commissioned IPSOS to undertake a survey of 2,011 representative Americans to try to better understand why.  All 2,011 were first asked whether they held a savings account or an MMDA.  The 1,591 respondents who indicated they owned at least one of these accounts were then asked four related questions about why they held an account.

the responses revealed that “easy access to money” and “not paying fees” were very important to large majorities:  Access was “important” to 96 percent and “of great importance” to 72 percent.  Not paying fees was important to 93 percent and of great importance to 75 percent.  While only 43 percent said that maintaining an account as a rainy-day fund was of great importance, 86 percent said it was important.  More than two-fifths (44%) also said that keeping a savings account was of great importance in making them “less likely to spend than if in a checking account,” with 79 percent saying this was important.

“Our survey suggests that most savers want an easily accessible and free way to maintain a rainy-day fund that will be more difficult for them to spend than if the dollars were in a checking account,” said CFA’s Brobeck.  Certainly the fact that the Federal government guarantees funds in these accounts is also a factor.

According to George Barany, director of America Saves at CFA: “Having easy access to a no-fee savings account with a low opening balance has been very important to the many lower income families seeking to establish an emergency fund, who have participated in the America Saves program.”

But why then did traditional savings account ownership and levels grow?  The report suggests three factors, two of which are related.  “The Great Recession is likely to have convinced some families that they should open a savings account or increase the amount in an existing account,” said CFA’s Brobeck.

Yet, institutional changes are also likely to have had an impact.  There has been a national savings movement, largely directed at young adults and lower-income households, much of its funded by the Ford Foundation, that began in the nineties and continues to this day.  CFA itself has initiated local savings campaigns, which use social marketing and behavioral economics principles, in dozens of cities and coordinates national efforts as well. America Saves Director George Barany noted a recent example of one such effort: “During America Saves Week 2021, more than 300,000 people deposited over $400 million into new and existing accounts in 16 participating financial institutions.”

A key goal of this savings movement has been to persuade banks to offer and promote free savings accounts that were bolstered by regular, automatic transfers from checking (or an income source) to savings (autosaves).  Today, all but one of the 13 largest banks (by number of branches) offers a savings account that waives monthly minimum balance fees for those with a checking account at that institution or those using autosaves.  Moreover, over half of these banks promote savings on their websites.  Credit unions have always required that customers open a savings account in order to qualify for membership.

“The future of savings accounts depends largely on the willingness of banks to maintain and promote no-fee accounts,” said CFA’s Brobeck.  “If banks do so more energetically, we can expect continued growth in the popularity and levels of savings accounts,” he added.

“Consumers would also save more if banks paid higher rates,” noted CFA’s Brobeck.  “The gap between savings interest rates and consumer loan rates is substantial and growing, as a future CFA study will document,” he added.

Contact: Stephen Brobeck, sbrobeck@consumerfed.org

The post New Research Reveals that Traditional Savings Accounts Have Grown More Popular in This Century and Why appeared first on Consumer Federation of America.

The report found that over half of U.S. households now own a traditional savings account, that the incidence has increased in this century, and that deposit levels have grown as well. Between 2004 and 2019:

• The proportion of households with traditional savings accounts rose 10.6 percent – from 47.1 percent to 52.1 percent – and the increase in this period was continuous.
• The median level of deposits of households with savings accounts rose by two-thirds – from $3,000 to $5,000 in nominal dollars (the CPI increased by only about one-third in this period).

The post Traditional Savings Accounts: Are They Still Popular? appeared first on Consumer Federation of America.

Vehicle inventory is down by about 30 percent which means car dealers have little incentive to negotiate.  “The rule of thumb that nobody pays ‘sticker price’ for a new car has fallen by the wayside as dealers stick to the manufacturers suggest retail price (MSRP) on the vehicle label,” said Gillis.  In fact, for some particularly popular vehicles in short supply, dealers are charging prices above sticker price.

Gillis’s advice on the best way to deal with this reality: “If you don’t need to replace your car right now, you should wait.”  The widely reported computer chip shortage and other repercussions from the pandemic are expected to ease up by the end of the year or early 2022. “By waiting, you’ll have more electric vehicles to choose from, as well as the 2022 models with the latest safety features,” said Gillis.

Unfortunately, there are many Americans who don’t have the luxury of holding off, and need to replace or buy a new vehicle right now.  If you find yourself in this predicament, CFA and Gillis are providing the following tips on coping with today’s market challenges.

Ten Tips on Saving in a Seller’s Car Market

1. Shop carefully. You can find some deals and incentives, especially on the less popular vehicles.  Everybody is looking for SUVs, but if a sedan meets your needs, you can find some good prices.
2. Shop around online. As car buyers become more comfortable with online vehicle purchases, more and more dealers are offering internet specials.  Shop carefully and read the fine print, but these offers can be good negotiating tools when you’re in the showroom.
3. Widen your search process.  If buying from a dealer 70-100 miles away will save you money, consider it. You can still take your car to your local dealer for service and warranty work.
4. Avoid the upgrades. Unfortunately, most manufacturers don’t let you pick and choose your options, you must buy them in packages. Skipping the fancy packages on a particular model can save you 10-20 percent.
5. Skip the extras.  Dealer add-ons are budget busters.  Floor mats, cargo containers, luggage racks and fabric treatments, if needed, can always be purchased later and at far less cost.
6. Decline the extended warranty.  Today’s new car warranties are very good and extended service contracts (they’re not really warranties) are not only expensive, but if they actually paid off for most people, they wouldn’t be such big profit centers.  Instead, plunk those service contract dollars in a special savings account to draw on if you need post-warranty repairs. Most likely, you can use this account to build up your down payment for your next vehicle.
7. Beware of using longer loans to reduce your monthly payments. While those smaller payments may sound attractive, you will pay significantly more in overall interest costs, and you’ll probably be “upside down” for the first year or two. That means if the car is totaled or you must sell it, you’ll have to make up the difference between your insurance payment (or sale) and the balance on your loan.
8. Shop around for financing. Interest charges are one of the most expensive aspects of car ownership. Knocking a point off the interest rate by shopping around will save you hundreds and lower your monthly payments.  Check with your credit union or bank to see what they are offering, so you’ll know if the dealer’s offer is a good one.  Warning, very few people qualify for the often-advertised 0 percent interest rates, so don’t get your hopes up.
9. Check out “No Haggle” dealers. No haggle or posted-price dealerships are becoming more prevalent. These dealerships will post a non-negotiable price on the vehicle, saving you the anxiety and pressure of trying to match wits with a seasoned, professional seller.
10. Consider selling your used car yourself. The used car market is hot, and you can usually sell it for more than the dealer will pay you on a trade-in. Those extra dollars can help make up for the higher prices you’ll see in the new car showroom.  Also, check out the national chains that offer to buy your vehicle with a price that’s good for 7 days.

Contact: Jack Gillis, 202-939-1018

The post Vehicle Shortage Wreaking Havoc with Car Buyer’s Pocketbooks appeared first on Consumer Federation of America.

• A significant majority of those surveyed by America Saves (59%) expressed concern about their financial future.
• One reason for this worry may be lack of adequate savings. According to the Federal Reserve’s SCF, well under half of Black households (42%) have a savings account and/or money market deposit account at a bank or credit union, and many with an account said they were not saving enough to meet emergency expenditures.
• A large majority of the respondents do not make “regular and automatic” deposits in savings or money market deposit accounts.
• A large majority of those without savings accounts, in the America Saves survey, would “seriously” or “probably” consider opening an account if their bank or credit union encouraged them to do so and charged no monthly fees.

“Our research shows clearly that most Black Americans do not have savings accounts and worry about their financial future,” said George Barany, Director of America Saves.  “We call on banks and credit unions to reach out to all low- and moderate-income households to offer them no-fee savings accounts and assistance in establishing automatic saving,” he added.  Given recent job and economic reports, America Saves believes that the challenge of creating a savings cushion will grow.

[i] The omnibus survey questions were written by CFA and administered by ENGINE Insights on November 12-17, 2020, to 1,003 Black adult respondents online.

Contact: George Barany, gbarany@consumerfed.org

The post New Research Shows that Most Black Americans Worry About Their Financial Futures and Also Lack a Personal Savings Account appeared first on Consumer Federation of America.

The post Black American Finances and Savings in a COVID Era appeared first on Consumer Federation of America.

Our nation’s comprehensive COVID-19 response must include a strong paid sick leave policy and protecting consumers by ensuring affordable access to communications services, preventing utility shutoffs, mortgage foreclosures, student loan defaults, negative credit reporting effects, overpriced insurance, and making sure that airline and hotel customers’ rights are protected in any financial bailout of these industries.

The Consumer Federation of America has identified critical consumer protection issues that must be addressed as part of a comprehensive response to this crisis. Many of these items are focused on protecting those hardest hit by the economic fallout. Doing so is not just a matter of economic justice; it is the best way to stabilize the economy.

CFA and it’s over 250 national, state and local organizations are committed to working with policymakers at all levels to implement a “Comprehensive Consumer Agenda to Address the COVID-19 Crisis”.  For the details behind the following agenda, please see our LINK March 20, 2020 letter to the President and Congress.

A Comprehensive Consumer Agenda to Address COVID-19

1. Create a comprehensive national paid sick leave policy to reduce the spread of the disease. Lack of paid sick leave encourages tens of millions of workers to continue working when they are sick, which can nullify the critically important benefits of social distancing.

2. Protect those hardest hit from economic hardship by:

• Providing forbearance to economically distressed mortgage borrowers. Any homeowner experiencing economic hardship because of the virus must have access to 180 days of forbearance on mortgage payments.
• Halting evictions and foreclosures. There must be a 180 day moratorium on evictions of tenants experiencing economic hardship because of the virus, with support provided to property owners who suffer rental income losses.
• Canceling student loan payments for the duration of the crisis. It is not enough to pause monthly payments, the government must make tax free payments on holder’s behalf so millions of Americans can continue to make progress reducing their student debt as the economy struggles.
• Suspending debt collection. Debt collection activities, including legal proceedings, garnishments, repossessions, and debt selling, must be prohibited during the state of emergency.
• Curtailing high-cost lending schemes: A rate cap of 36% must apply to high-cost credit, such as payday loans, refund anticipation loans, and car title pawns to ensure that vulnerable consumers aren’t trapped by overpriced debt.
• Placing a moratorium on negative credit reporting. To protect consumers’ credit records during the pandemic, there must be, at least, a four month moratorium on negative credit reporting.
• Maintaining consumers’ access to affordable communications services. As remote communications become critically important, service providers must abandon pricing practices that maximize revenues, suspend overcharges for “excess” data usage, terminate service cut-offs, and increase network availability to the public.
• Requiring big data platforms to promote the public interest. Big data platforms must remove misleading information. Their big microphones must promote the public interest, not the corporate bottom lines. Non-commercial pandemic information from public health, safety and governmental entities must be given a prime location on all screens.
• Preventing misleading advertising and price-gouging. Advertisers, and the media carrying ads, must ensure that claims related to the coronavirus are completely accurate. Online marketplaces must reject products and services making misleading claims or that offer basic necessities at unfairly inflated prices.

3. Ensure that consumers’ interests are protected as industries seek federal financial support by:

• Mandating fairness in the skies. Airlines must waive cancelation and change fees for all consumers during the federal state of emergency. As a condition of an airline bailout, Congress must require price transparency, make future fees for cancelations, changing flights, and checking bags proportionate to actual costs, lift state preemption, and provide consumers with private rights of action.
• Accommodate hotel customers. As organizations and individuals heed requests to limit non-essential travel and cancel events, some hotels have continued to charge consumers and organizations. As a condition of a hotel bailout, Congress must require hotels to honor requests for room and event cancelations without penalty and to refund deposits until the federal state of emergency is suspended or travel limit recommendations are lifted. Going forward they must provide full price transparency on charges and extra fees.
• Reduce auto insurance premiums to reflect reduced driving. Insurers should be required to offer discounts to people driving less due to COVID-19.  Miles driven, a key factor in claims costs, will drop dramatically as workers are laid off, switch to telework, or self-isolate. This should be a consumer benefit, not an insurer windfall. See CFA’s letter to Insurance Commissioners.

The post Government Must Protect Consumers’ Health And Pocketbooks During COVID-19 Crisis appeared first on Consumer Federation of America.

“If banks made a greater effort to offer and market affordable savings accounts to lower income families, these households would be better able to meet their emergency savings needs,” said Stephen Brobeck, a CFA Senior Fellow and author of the report.

The report emphasizes the importance of savings accounts that are fed by regular, automatic transfers from checking.  “80% of all lower income households [two lowest income quintiles] have checking accounts,” noted Brobeck.  “It would be relatively easy for banks to promote automatic savings to these families,” he added.

The report recognizes that while small savings accounts may not be profitable for banks, they will eventually permit some customers to save larger sums and take out auto and mortgage loans.  The report points out that banks can maintain these small accounts inexpensively when deposits are made automatically, withdrawals are through ATMs, and monthly statements are emailed.  It also notes that the Community Reinvestment Act requires banks, especially large ones, to meet a service test for making available services, including “low-cost bank accounts.”

CFA’s 21-page report:

• Reviews research on emergency savings needs,
• Explains the importance of bank and credit union savings accounts for meeting these needs,
• Defines criteria for accessible and affordable automatic savings accounts that are promoted on bank websites,
• Uses these criteria to evaluate savings accounts offered by big banks,
• Identifies the banks that offer accounts meeting these criteria,
• Identifies those few banks offering customers financial incentives to save,
• Suggests an expanded role for regulators in encouraging banks to offer and promote accessible and affordable savings accounts,
• Outlines research that would provide important new knowledge about the effectiveness of automatic savings accounts and their marketing, and
• Offers suggestions to consumers about how to most easily build emergency savings.

Consumer Tips on Increasing Savings

 As well as calling on banks to promote affordable savings, the report urges consumers to use existing bank and credit union opportunities to save more effectively.

• For those with an automated savings account, increase (even by a small amount) your monthly deposit.
• For those without an automatic savings account, ask your bank or credit union if you can automate it and, by doing so, avoid monthly fees.
• For those with a checking account but no savings account, ask your bank or credit union if they can create an automatic savings account with no monthly fees.
• For those with no checking or savings account, find a local bank or credit union that offers a savings account with a small opening deposit and no monthly fees. Ten of the 101 largest banks offer such an account, and large credit unions are even more likely to do so.

While the report focused on savings accounts at the 101 largest banks – which maintain over half of all bank branches — it also reviews accounts at the ten largest credit unions (by number of branches).  This review found that six of the ten credit unions offer a savings account with a very low initial deposit and no minimum balance requirement while three others have low minimum balance requirements to avoid fees.

The report also learned that:

• Eighty (79%) of the big banks charge no monthly fees on savings accounts held by those under 17 or 18 years of age.
• Twelve of these banks extend the fee waiver to young adults up to the age of 24 or 25.
• Seven banks waive monthly fees for older persons.

The post Only One-Quarter of Big Banks Promote Accessible and Affordable Savings Accounts to Lower-Income Savers appeared first on Consumer Federation of America.

The post Do Big Banks Provide Affordable Access To Lower Income Savers? appeared first on Consumer Federation of America.

 Top Ten Tips for Holiday Shoppers

 Make a List, Check It Twice: Decide how much you can spend this holiday and stick to it. When you make your list, include an amount for each person and, if you know what you’re getting them, what you expect to pay for the item.  Adding your list up at the kitchen table can be an eye opener—so make adjustments early rather than when you are running through the stores or pounding on your keyboard.  And when you’re shopping, keep a running total of your spending—it’s amazing how keeping tabs on your total will protect your wallet as it fills with receipts!

You Gotta Shop Around: You can easily save 10 percent, or considerably more, by comparing prices. When shopping around online, be sure you purchase from a secure site, review receipts for accuracy, and be mindful of shipping costs. If free shipping is available with a minimum purchase, be sure the additional items are really needed and don’t put you way over the ‘free shipping’ requirement.

Give the Scammers Goose Eggs, Not Your Money: If you see a popular item online for much less than the typical price, beware—it could be from a fraudster. That amazing deal may simply be a way to get your credit card information. Stick with companies you know and steer clear of email and social network offers from unfamiliar sellers – they could be scammers who will take your money and run.

Santa’s Receipts are Gold: Whether buying online or in-store, keep all receipts—they are gold! Without a receipt, retailers will usually refund the item’s current price, not what you actually paid.  And if you find an item cheaper elsewhere, many retailers will match the lower price, but only if you have the receipt.

Avoid Extra Treats: When shopping online, be careful of additional “suggested” items based upon your purchases. Your savings after searching for the best price can evaporate when you buy the extras that pop up as you check out.

Don’t Get Wrapped Up in Debt: Avoid borrowing money for holiday gift giving. Remember, the old adage—it’s the thought that counts—not the cost! If you use a credit, rather than debit card, be sure you know the day your payment is due so that high interest charges don’t evaporate the great buys you made.

Dream of a Green Christmas: To avoid overspending, consider paying with cash. Surveys show we spend more when using a credit card—doling out the “green” is a great way to limit your spending.

Don’t Let the Grinch Steal Your Christmas: Identity thieves love unsecured wireless networks—so only connect to networks that require a security key or certificate.  If you use a wireless connection at home, be sure that the security features are turned on and set your own password, rather than use the default password.

Ask Santa About Returns: Before checking out, double check return policies and time limits. Some retailers will let you return online purchases to their stores to avoid return shipping charges, others actually provide free return labels.

Checkout with Care: Watch out for “savings” coupons and clubs when checking out—you may be signing up for a monthly program and your credit or debit card number could be transferred to a another company. These programs typically charge $10 to $15 a month and the rigmarole to cancel can be a hassle.

The post Shopping Smart: CFA’s Jack Gillis Releases His Latest Tips to Keep Holiday Shopping From Becoming a January Hangover appeared first on Consumer Federation of America.

America Saves, managed by the Consumer Federation of America (CFA), and the American Savings Education Council (ASEC) coordinate the Week. With their support, ORC International undertakes the savings survey. This research firm interviewed a representative sample of 1,007 adult Americans on January 26-29 by landline and cell phone. The margin of error is plus or minus three percentage points. The survey data is available to the press on request.

Over Past Decade, Perceived Savings Outcomes Worsened Then Improved

Analyzing data from all ten annual surveys reveals that perceived savings outcomes first worsened then improved somewhat, as the table below suggests.

“The Great Recession and recovery from this debacle help explain these trends,” noted Stephen Brobeck, CFA Executive Director and a founder of America Saves. “During the decade, employment, incomes, stock prices, and home values declined then rose, first depressing personal saving and then allowing it to grow,” he added.

Between 2007 and 2013, according to the Federal Reserve Board’s Survey of Consumer Finances, median net worth (in 2013 dollars) declined by 40.0 percent, from $135.4 thousand to $81.2 thousand. Because of the economic recovery, the 2016 survey, expected to be released in the coming year, should show gains in household net worth.

Over Past Decade, Savings Habits Eroded

Surprisingly, during the past decade saving habits eroded, as the table below indicates.

Those who know their net worth are more likely, than those who do not, to allocate their income to saving rather than spending. Research has shown that those with a saving plan save far more than those who do not. The only effective way for most Americans to save is automatically at or outside work.

“The erosion of saving habits during the economic recovery was unexpected,” noted Brobeck. “I suspect that low savings yields and less promotion of saving by many banks and credit unions had something to do with this, as did the preoccupation of some households with obtaining relief from crushing debt burdens,” he added.

Few Lower Income Americans Report Good Progress in Meeting Savings Needs

Whether Americans report making progress in meeting their savings needs is strongly associated with household income. Nearly two-thirds (66%) of those with incomes $100,000 and over report good or excellent savings progress, with only seven percent indicating no progress. In contrast, only 14 percent of those with incomes below $25,000 report good or excellent savings progress, and 58 percent said they are making no progress at all.

These numbers are consistent with the percentages of the two income groups who said they were saving at least 5 percent of their incomes – 77 percent of the upper income group but only 24 percent of the lower income group. Only seven percent of the upper income group, but 53 percent of the lower income group, said they were saving nothing at all.

“While it is difficult for many lower-income families to build savings, most have the ability to save funds that will help meet emergencies in the near future and supplement Social Security payments in retirement,” said Brobeck. “The most effective way to do this is through automatic deposits from paychecks and/or checking accounts into regular and retirement savings accounts,” he added.

More Than 1,500 Organizations Join America and Military Saves Week to Encourage Savings

During America Saves Week and Military Saves Week (Feb. 27-March 4, 2017), organizations across the country and military installations around the world promote savings and encourage millions of people to assess their savings status.

This year’s themes are:

• Monday, Feb. 27: Save Automatically with the use of direct deposit, automatic transfers from checking to savings accounts, and automatic contributions to retirement accounts.
• Tuesday, Feb. 28: Family Savings Day is an opportunity to build good savings habits at home by sharing budgeting, saving, retirement, and workplace benefits decisions with your children.
• Wednesday, March 1: Save for Retirement to ensure you have enough money for a comfortable standard of living when you stop working or reduce the number of hours you work by participating in workplace savings programs, contributing to an Individual Retirement Account (or IRA), or opening a free and easy myRA account.
• Thursday, March 2: Saving at Tax Time by saving a portion of your tax refund can be a big step toward meeting your savings goals.
• Friday, March 3: Pay Off High-Interest Debt so you can start to accumulate wealth. Find places to cut your spending so you can pay down debts faster.
• Saturday, March 4: Save for Emergencies by starting with small, regularly scheduled contributions that build up over time in a savings account you do not have easy access to.

“The research is clear that the key to successful saving is to have a savings plan,” said Nancy Register, director of America Saves. “America Saves Week is the perfect opportunity to set a savings goal, make a plan, and save automatically.”

“America Saves Week is a great way to help educate individuals on the most effective savings habits they can incorporate into their lives,” said Carolyn Pemberton, program coordinator for ASEC. “It’s important to raise individual awareness of the small and large steps that can help increase individual savings.”

#ImSavingFor Contest

To incentivize savings during America Saves Week 2017, America Saves is once again offering its annual #ImSavingFor video and photo contest.

The America Saves Week 2017 #ImSavingFor contest is sponsored by Clearpoint, a Division of MMI. To enter to win the $1,000 grand prize, savers—old and new—can submit a photo or video of their savings story or goal at americasavesweek.org/imsavingfor.

Contact: Jack Gillis, CFA, 202-737-0766; Carolyn Pemberton, ASEC, 571-212-5475

America Saves is a campaign managed by the nonprofit Consumer Federation of America that uses the principles of behavioral economics and social marketing to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week. Learn more at americasaves.org and americasavesweek.org.

American Savings Education Council (ASEC), a program of the Employee Benefit Research Institute Education and Research Fund (EBRI-ERF), is a nonprofit national coalition of public- and private-sector organizations committed to making retirement planning and saving a priority for all Americans. Learn more at www.choosetosave.org/asec/.

The post Over Past Decade, Savings Habits Eroded, But Perceived Savings Outcomes Deteriorated Then Improved appeared first on Consumer Federation of America.

As the table below shows, in the past year the three key savings indicators have declined – savings interest from 75 percent to 65 percent, savings effort from 65 percent to 55 percent, and savings effectiveness from 62 percent to 53 percent. Moreover, savings interest, effort, and effectiveness are now considerably lower than they were in the three previous Septembers – 2013, 2014, and 2015.

However, as the table below indicates, to a large extent these declines reflect large losses experienced by low- and moderate-income Americans. For those with incomes under $25,000, in the past year declines in the three indicators were either 15 or 16 percentage points. For those with incomes $25,000-$50,000, these declines were either 13 or 15 percentage points. Yet, for those with incomes $100,000 or more, declines were much more modest or nonexistent – five percentage points for interest, four percentage points for effort, and nothing for effectiveness. In both September 2015 and September 2016, for the high-income group, savings effectiveness remained at 71 percent. Moreover, for those with incomes between $75,000 and $100,000, during the past year savings effectiveness increased from 62 percent to 64 percent.

“The economic inequality in our society is reflected in our savings statistics,” noted Stephen Brobeck, Consumer Federation of America’s Executive Director and a founder of America Saves. “The economic recovery, particularly the increase in housing prices and buoyant stock market, have especially benefited middle and upper income groups,” he added.

But the steep decline in the PSI percentages for savings interest, effort, and effectiveness among those with incomes below $50,000 is puzzling. “It is not clear why savings indicators for lower income groups have declined,” noted CFA’s Brobeck. “I hope this decline represents a statistical anomaly rather than any increase in inequality. Future PSI surveys will help clarify this issue.”

All PSI surveys have shown a strong correlation between income and the savings indicators reflecting the fact, mainly, that the higher one’s income, the easier it is to save.

The Personal Savings Index is based on surveys undertaken for America Saves by ORC International, which surveyed a representational sample of over 1,000 adult Americans by cell phone and landline. Respondents were asked to respond to the three questions about interest, effort, and effectiveness on a 10-point scale ranging from “no interest” to “great interest,” and these responses were converted into percentages. The latest interviews were conducted September 8-11, 2016. The survey’s margin of error is plus or minus three percentage points.

Contact: Katie Bryan, 202-939-1018

America Saves, a campaign managed by the nonprofit Consumer Federation of America, seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. The research-based campaign uses the principles of behavioral economics and social marketing to change behavior. Nonprofit, government, and corporate groups participate in America Saves nationally and through local, regional, and statewide campaigns around the country. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week. Learn more at americasaves.org and americasavesweek.org.

The post American’s Personal Savings Indicators Tumbled in Past Year, Especially for Lower-Income Americans appeared first on Consumer Federation of America.

The America Saves Personal Savings Index measured American’s savings interest at 65 percent, savings effort at 57 percent, and savings effectiveness at 56 percent in May 2016. All were within two percentage points of the January 2016 and May 2015 indicators. The Personal Savings Index is measured three times a year.

Despite being the most effective savers, savings indicators among the highest earners declined from May 2015 to May 2016. Among those making $100,000 or more, personal savings interest is down 3 percentage points, savings effort is down 6 percentage points, and savings effectiveness is down 5 percentage points from May 2016.

“It surprised us that, unlike all other households, high-income households evidenced less interest, effort, and effectiveness than they did a year ago,” said Stephen Brobeck, Executive Director of the Consumer Federation of America and a founder of America Saves.” I can only speculate that most of them know they are well-off but were a little shaken by the decline in stock prices early this year,” he added.

Generally speaking, savings indicators were the same or higher than May of last year for Americans earning $75,000 or less. While savings efforts among those earning between $25,000 and $50,000 declined 5 percentage points, savings interest and effectiveness remained the same.

Despite the decline over the last year in savings indicators among the wealthiest, low-income Americans remain significantly far behind. Compared to the highest earners, those making under $25,000 are less interested in saving by 18 percentage points, make less of an effort to save by 24 percentage points, and are less effective at saving by 25 percentage points.

“Our survey makes clear that financial resources make an impact on American’s personal savings interest, effort, and effectiveness,” said Brobeck. “Low-income Americans struggling financially today are less able and less likely to be interested in saving or making an effort to save, which means they could continue to struggle tomorrow.”

The Personal Savings Index is measured for America Saves by ORC International, which surveyed a representational sample of over 1,000 adult Americans by cell phone and landline. Respondents were asked to respond to the three questions about interest, effort, and effectiveness on a 10-point scale ranging from “no interest” to “great interest,” and these responses were converted into percentages. The latest interviews were conducted May 12-15, 2016. The survey’s margin of error is plus or minus three percentage points.

Contact: Katie Bryan, 202-939-1018

America Saves, a campaign managed by the nonprofit Consumer Federation of America, seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. The research-based campaign uses the principles of behavioral economics and social marketing to change behavior. Nonprofit, government, and corporate groups participate in America Saves nationally and through local, regional, and statewide campaigns around the country. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week. Learn more at americasaves.org and americasavesweek.org.

The post Personal Savings Interest, Effort, and Effectiveness Steady Over Last Year, Except for Declines Among Wealthiest Americans appeared first on Consumer Federation of America.

• Saving at least 5 percent of one’s income (49%)
• Saving enough for retirement with a “desirable standard of living” (52%)
• Automatic saving outside of work (43%)
• No consumer debt (38%)

Responses to other questions, however, suggest that around two-thirds of Americans are making at least modest savings progress:  70 percent reported at least some progress in meeting savings needs.  66 percent reported saving at least some of their income.  And 63 percent reported “sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit.”

The survey findings were released on the first day of the tenth annual America Saves Week.  More than 1,800 nonprofit, government, and business organizations at the national, state, and local levels have joined to promote personal savings.  America Saves, managed by the Consumer Federation of America (CFA) and the American Savings Education Council (ASEC) coordinate the Week, including the savings survey, which again was undertaken by ORC International.  This research firm interviewed a representative sample of 1,004 adult Americans on January 28-31 by landline and cell phone.  The margin of error is plus or minus three percentage points (full sample).

More Men Than Women Report Saving Progress

On twelve separate questions on various financial well-being indicators (see appended Table 2), men’s responses were more positive than women’s responses, with differences ranging from five to thirteen percentage points.  For example, 74 percent of men, but only 67 percent of women, reported that they were making saving progress, and 44 percent of men, but only 36 percent of women, reported good or excellent saving progress.

Similarly, 72% of men, yet only 60 percent of women, reported that they are spending less than income and saving the difference.  This gender gap persisted for those saving at least five percent of income – 54 percent of men and only 45 percent of women.

“The most important reason for the gender gap in savings is differences in income and wealth,” noted Stephen Brobeck, executive director of CFA and a founder of America Saves.  “The fact that men have larger incomes and financial assets than women makes it easier for them to save,” he added.

Many Americans Acknowledge Retirement Savings Shortfall

When the survey asked whether respondents were “saving enough for a retirement in which you will have a desirable standard of living,” only about half of non-retired persons (52%) said “yes.”  That figure was down three percentage points from last year (55%) and down six percentage points from 2008 (58%).  Moreover, as for the other saver characteristics, there was a significant gender gap — 57 percent for non-retired men, and 47 percent for non-retired women.

For those non-retired persons who said they were not saving enough for retirement, about one-quarter (27%) said the main factor was high day-to-day expenses, and another quarter (25%) said the main factor was debt and related expenses, with about half this group (12%) citing education expenses and debt.  Yet, for those under 45 years of age who were not unemployed, 22 percent said education expenses and debt.  For those over 45 years of age who were not unemployed, the most cited expense (16%) after day-to-day expenses was mortgage or housing expenses.

For the first time, the annual America Saves Week survey asked for respondents’ views about participating in retirement programs.  When asked the highest percentage of their salary that they would contribute to a plan offered by their employers with auto-escalation, more than four-fifths (82%) indicated that they would contribute more than three percent, with 40 percent indicating ten percent or higher.  And when asked what they would do if their employer did not offer a retirement plan and they were automatically enrolled in an IRA administered by their state government with a default annual contribution of three percent, roughly equal percentages said they would contribute less than three percent (32%), three percent (31%), and more than three percent (28%).

Those With a Plan Save More Successfully

As the table below shows, those with a “savings plan with specific goals” save more successfully than those without a plan.

Income appears to be correlated with some but not all of these differences. More specifically, the financial well-being indicator gaps between those who plan and do not plan are always larger than those gaps between households with annual incomes of $25,000-$50,000, and those households with incomes above $100,000.

More Than 1,800 Organizations Join Tenth Annual America and Military Saves Week to Encourage Individuals to Save Money and Build Wealth

During America and Military Save Week, February 22 – 27, organizations from across the nation and military installations around the world promote the importance of saving.  Organizations are embracing this year’s theme, “make saving automatic,” by encouraging the use of direct deposit with a portion going towards savings, automatic transfers from checking to savings accounts, and automatic contributions to retirement accounts.  For more on how individuals can participate, visit http://www.americasaves.org/for-savers/participate-in-asw.

“The research clearly demonstrates that those with a plan are nearly two times as likely to spend less than they earn and save the difference,” said Nancy Register, director of America Saves.  “America Saves Week is the perfect opportunity for everyone to set a savings goal, make a savings plan, and save automatically.”

“It’s a common theme to see expenses and debt get in the way of retirement savings,” said Kathy Stokes, director of the American Savings Education Council.  “But even saving just a small amount can add up over time.  America Saves Week is a great time to encourage people to start saving for retirement, even if the amount seems small.”

This year America Saves and Military Saves are incentivizing savings through two promotions.

#imsavingfor Contest

Individuals can submit a photo of themselves and their savings goal on the social media platform of their choice using the #imsavingfor hashtag.  They can then enter to win $500 by completing the form at AmericaSavesWeek.org/imsavingfor.

Text Message Goal-Based Tips and Reminders for Military Service Members

Military service members and their families can now choose to sign up for goal-based text messages to help them save after they take the Military Saves Pledge at https://militarysaves.org/for-savers/savings-tools-and-resources/take-the-pledge.  Among those signing up for texts, one $500 winner will be randomly selected monthly in March, April, and May.

Learn more at americasavesweek.org
Download an infographic of the survey: http://americasavesweek.org/wp-content/uploads/2016/02/ASW2016_INFOGRAPHIC.jpg

Contact: Jack Gillis, CFA, 202-737-0766; Kathy Stokes, ASEC, 202-368-5568

America Saves, a campaign managed by the nonprofit Consumer Federation of America, uses the principles of behavioral economics and social marketing to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week. Learn more at americasaves.org and americasavesweek.org.

 American Savings Education Council (ASEC), a program of the Employee Benefit Research Institute Education and Research Fund (EBRI-ERF), is a nonprofit national coalition of public- and private-sector organizations committed to making retirement planning and saving a priority for all Americans.. www.choosetosave.org/asec/

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Table 1:  PSI Percentages in Last Eight Trimesters

“Data from the eight trimester surveys suggest that savings interest, effort, and effectiveness tend to be lower in January than in May or September,” noted Brobeck.  “Perhaps holiday spending the previous month has discouraged some people from saving and also made it more difficult to do so,” he added.

The surveys are undertaken for America Saves by ORC International, which surveys a representational sample of 1,000 adult Americans by cell phone and landline.  The latest survey was undertaken January 7-10, 2016.  Respondents were asked to respond to the three questions about interest, effort, and effectiveness on a 10-point scale ranging from “no interest” to “great interest,” and these responses were converted into percentages.  The survey’s margin of error is plus or minus three percentage points.

America Saves, a campaign managed by the nonprofit Consumer Federation of America, seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. The research-based campaign uses the principles of behavioral economics and social marketing to change behavior. Nonprofit, government, and corporate groups participate in America Saves nationally and through local, regional, and statewide campaigns around the country. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week. Learn more at americasaves.org and americasavesweek.org.

The post Personal Savings Index (PSI) Indicators Lower This Month Than Last September appeared first on Consumer Federation of America.

During this latest trimester, savings interest rose from 63 to 75 percent, effort from 58 to 65 percent, and effectiveness from 55 to 62 percent. The September numbers are the highest recorded in the seven triannual surveys conducted to date, as the table below shows.

Table 1:  PSI Percentages in Last Seven Trimesters

“While no trends over the past two years are yet evident, it is encouraging that the latest Personal Savings Index numbers are so high,” noted Stephen Brobeck, Executive Director of the Consumer Federation of America and a founder of America Saves.

The extent to which various factors including perception of one’s own financial condition and that of the whole economy, as well as one’s actual income and ability to save, affect the PSI numbers is unclear. However, the PSI surveys clearly show that income is critically important: In general, the higher one’s income, the higher one’s savings interest, effort, and effectiveness, as the table below shows.

Table 2:  PSI Percentages for September 2015 by Household Income

“Our surveys are consistent with other research showing that those with low incomes are more likely to struggle financially in the present, and be less likely to focus on saving for the future, than are those with high incomes,” noted CFA’s Brobeck.

The surveys are undertaken for America Saves by ORC International, which surveys a representational sample of 1,000 adult Americans by cell phone and landline. The latest ORCI interviews were between September 10 and 13. Respondents were asked to respond to the three questions about interest, effort, and effectiveness on a 10-point scale ranging from “no interest” to “very great interest,” and these responses were converted into percentages. The survey’s margin of error is plus or minus three percentage points.

Contact: Katie Bryan,  kbryan@consumerfed.org, 202-939-1018

America Saves, a campaign managed by the nonprofit Consumer Federation of America, seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. The research-based campaign uses the principles of behavioral economics and social marketing to change behavior. Nonprofit, government, and corporate groups participate in America Saves nationally and through local, regional, and statewide campaigns around the country. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week. Learn more at americasaves.org and americasavesweek.org.

The post Personal Savings Interest, Effort, and Effectiveness Rebounds from May Lows to New Highs in September appeared first on Consumer Federation of America.

These four-month decreases were especially pronounced among low-income respondents.  For those with household incomes under $25,000, interest declined from 58% to 52%, effort fell from 51% to 43%, and effectiveness dropped from 49% to 41%.  In contrast, for those in households with incomes $100,000 and over, while interest flagged (down from 82% to 77%), effort increased from 73% to 75%, and effectiveness rose from 72% to 73%.

“While it is not clear why indicators declined for low-income but not upper-income consumers, the anemic first-quarter economy, with stagnant growth, may be related to these differences,” noted Stephen Brobeck, Consumer Federation of America Executive Director and a founder of American Saves.

The PSI percentages for the past six trimesters are the following:

The surveys are undertaken for America Saves by ORC International, which interviewed a sample of 1,015 adult Americans May 7-10 by cell-phone or landline.  The survey’s margin of error is plus or minus three percentage points.

Contact: Katie Bryan,  kbryan@consumerfed.org, 202-939-1018

America Saves, a campaign managed by the nonprofit Consumer Federation of America, seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. The research-based campaign uses the principles of behavioral economics and social marketing to change behavior. Nonprofit, government, and corporate groups participate in America Saves nationally and through local, regional, and statewide campaigns around the country. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week. Learn more at americasaves.org and americasavesweek.org.

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Washington, D.C. – In the past year, an increasing number of Americans reported some improvement on nearly a dozen savings indicators, according to the 8th annual America Saves Week survey. But only two-fifths of respondents indicated “good” or “excellent” progress meeting their savings needs.

“Our survey findings are consistent with both continued economic recovery and the persistence of inequality,” noted Stephen Brobeck, executive director of the Consumer Federation of America and a founder of America Saves. “Americans are saving a little more effectively today than a year ago, but only a minority are doing so very successfully,” he added.

The survey findings were released on the first day of the 9th annual America Saves Week. Nearly 1,700 nonprofit, government, and business organizations at the national, state, and local levels have joined to promote personal savings. America Saves, managed by the Consumer Federation of America (CFA), and the American Savings Education Council (ASEC), managed by the Employee Benefit Research Institute (EBRI), coordinate the Week, including the savings survey, which again was undertaken by ORC International. This research firm interviewed a representative sample of 1,009 adult Americans on January 29-February 1, 2015 by landline and cell phone. The margin of error is plus or minus three percentage points.

Small, Across-the-Board Improvement in Savings Indicators

The America Saves-ASEC survey revealed small improvements in numerous savings indicators, as the appended table shows. Significantly, those who said they are spending less than their income and saving the difference increased from 68 percent to 71 percent in the past year. Those who said they are saving at least 5 percent of their income grew from 47 percent to 52 percent.

A large and increasing majority of respondents also reported improvements in their consumer indebtedness. In the past year, the portion who said they had no consumer debt, or were reducing their consumer debt, rose from 76 percent to 78 percent. And respondents who said they had “sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit” rose from 64 percent to 66 percent.

Yet Only a Minority Report Good Savings Progress

In the past year, there was also an increase in the portion of respondents who said they were making good or excellent savings progress – from 35 percent in 2014 to 40 percent in 2015. This latter figure was close to the percentage who reported knowing their net worth (43%), have a spending plan to meet savings goals (42%), and are saving automatically outside of work (43%).

Almost half of respondents said they were “saving enough for a retirement” with “a desirable standard of living” (55%), save at least 10 percent of their income (52%), and, among the non-retired, save at work (49%).

Those With a Plan Save More Successfully

As the table below shows, those with a “savings plan with specific goals” save more successfully than those without a plan

Income can account for some but not all of these differences. For example, for those who spend less than their income and save the difference, there is only a twelve percentage point gap between moderate and high income groups – 75 percent for those with incomes between $25,000 and $50,000, and 87 percent for those with incomes of at least $100,000. (Only 54 percent of those with incomes below $25,000 save this difference.)

“Making a savings plan focuses one’s attention on how one spends and saves their income,” noted Dallas Salisbury, president and CEO of the Employee Benefit Research Institute, and founding director of the American Savings Education Council. “Those with a savings plan tend to be more careful spending money, less willing to borrow unwisely, and more likely to save conscientiously,” he added.

Nearly 1,700 National, State, and Local Organizations Join 9th Annual America Saves Week to Encourage and Assist Personal Saving

America Saves Week, in conjunction with Military Saves Week, is an annual opportunity for organizations – nonprofits, government agencies, financial institutions, and employers – to join together to encourage individuals and families to take financial action. “The first step toward financial action is setting a goal, and our first ever #imsavingfor contest provides an incentive to do just that. We’re asking Savers and followers – old, new, and prospective – to submit a photo of themselves and their savings goal on their social media platform of choice using #imsavingfor for a chance to win $500,” said Nancy Register, America Saves Director and CFA Associate Director. “The second step toward financial action, making a plan, is key to successful saving, as the results of our annual saving survey demonstrate.”

Also new this year, America Saves is recognizing banks and credit unions that go above and beyond to encourage people to save money during the week with the America Saves Designation of Excellence. The designation acknowledges exceptional financial institutions that succeed in promoting savings or other wealth building accounts and have high levels of accounts opened or added to during America Saves Week. In a further effort to help more people save successfully, America Saves has launched new Spanishlanguage resources at www.americasaves.org/for-savers/hispanic-america-saves-enespanol.

“Whether we call them goals or not, we all have something we need or want to save for,” said Kathy Stokes, Director of the American Saving Education Council. “By identifying a goal, whether it’s saving for education, a vacation, a home or retirement, we’re taking an important step. America Saves Week is a great time to establish a goal, and take the next step in putting money aside to achieve it.”

Nearly 1,700 organizations have signed up to participate in America Saves Week, 1,100, and Military Saves Week, 575, including the Social Security Administration, USAA, St. Louis Saves, Department of Defense, TIAA-CREF, and the United States Department of Agriculture/National Institute of Food and Agriculture.

“America Saves Week is the perfect opportunity for Americans to assess their savings and plan for retirement,” said Maria Artista-Cuchna, Acting Associate Commissioner, Office of External Affairs, Social Security. “Our website, socialsecurity.gov, is a great place to get started with planning for the financial future. We encourage everyone to visit our website and create an online my Social Security account today. With an online account, individuals can view their Social Security Statement, which is a valuable financial planning tool.” Over the next few months, Social Security will continue to partner with America Saves and promote the importance of saving and planning for retirement.

“We think that it’s important for military members to create an actionable savings plan. Learning to save is the first step in avoiding debt and securing one’s future, so we’re excited to support the noble goals of Military Saves,” stated Bob Winzenried, retired Army Command Sgt. Maj. and USAA Military Affairs Relationship Director (Army). “At USAA, we want to help our military members achieve long-term financial security as they provide security for our nation. That’s why we’re encouraging our members and our employees to take the pledge to start saving during this year’s Military Saves campaign.”

“St. Louis Saves has teamed up with the St. Louis Regional Unbanked Taskforce, the United Way of Greater St. Louis, and the Urban League of Metropolitan St. Louis to spearhead the St. Louis Saves Designation of Excellence Challenge, an initiative challenging local banks and credit unions to promote savings and wealth-building,” said St. Louis Treasurer Tishaura Jones. “We have about 19-20 banks and credit unions participating this year. They have creative freedom to get people to save more and take the pledge to save.”

This is the ninth year that the Department of Defense has had an active role in America Saves Week, or Military Saves Week, as it is known in the military community. Since 2007 more than 180-thousand servicemembers have taken the Military Saves pledge. “This year, we are supporting the goal of 50-thousand pledges,” said Barbara Thompson, Director, Family Policy, Children/Youth and Special Needs, Office of the Secretary of Defense. “We’re challenging the Army, Navy, Air Force and Marines to each get ten-thousand service members and family members to take the Military Saves pledge, and we’re challenging the Coast Guard, National Guard and reserves to reach a combined total of ten-thousand pledges.”

TIAA-CREF is partnering with employers to bring the America Saves Week campaign to employees in the nonprofit community as another great resource to encourage savings by providing a toolkit they can use to encourage employees to plan for a successful future. “Employees value the education and advice that their employers provide through workplace retirement plans,” said Sue Fulshaw, Managing Director, Retirement Plan Product Management, TIAA-CREF. “Events such as America Saves Week help elevate awareness of the important need to save for the future and to create lifetime income. TIAA-CREF encourages retirement plan sponsors to take advantage of this opportunity to support and engage plan participants. Together, they can lay the foundation for lifetime financial well-being.”

Cooperative Extension educators reach individuals and families in more than 3,000 counties across the country, “To kick off America Saves Week, we are launching the five-week America Saves Financial Challenge, an opportunity for potential savers to take financial action by saving $250,” said Susan S. Shockey, National Program Leader, Family and Consumer Economics, National Institute of Food and Agriculture /USDA. “In addition, throughout the week educators are holding Twitter Chats, face-to-face programs for consumers, and webinars to empower Americans to make wise decisions regarding their personal finances.”

Learn more at americasavesweek.org.

Download an infographic of the survey.

Visit America Saves En Espanol.

America Saves, a campaign managed by the nonprofit Consumer Federation of America, uses the principles of behavioral economics and social marketing to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings yearround and during America Saves Week. Learn more at americasaves.org and americasavesweek.org.

American Savings Education Council (ASEC), managed by the Employee Benefit Research Institute (EBRI), is a nonprofit national coalition of public- and private-sector organizations undertaking initiatives to raise public awareness about what is needed to ensure long-term personal financial independence. www.choosetosave.org/asec/

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“Last year at this time, we suggested that a post-holiday financial hangover helped explain the decline in savings interest, effort, and effectiveness from September 2013 to January 2014,” said Stephen Brobeck, Consumer Federation of America Executive Director and a founder of America Saves. “But the fact that the decline did not occur between September 2014 and January 2015 suggests that Americans are now feeling better about their financial condition,” he added. Data collected by ORC International for America Saves in five triannual surveys shows a strong positive association between PSI percentages and household income.

Comparing survey data over the past year also suggests that substantial increases in the savings interest, effort, and effectiveness of low- and middle-income households account for almost all of the overall PSI increases (see Table 2). Significant increases occurred for those with less than $75,000 annual income, but little or no increases for those with income above this amount.

“Our new data suggest that low- and middle-class Americans are feeling more optimistic about their financial situation now than a year ago,” Brobeck noted. “Instead of being distracted by heavy holiday spending and debts, they are nearly as interested and active saving today as they were this past September,” he added.

The most recent survey was undertaken for America Saves by ORC International, which surveyed a representative sample of adult Americans (by cell phone and landline) January 8-11, 2015. Respondents were asked, after learning that the survey dealt with “personal saving for goals ranging from s rainy day fund to retirement,” to rate their personal savings interest, effort, and effectiveness on a ten-point scale. The survey has a margin of error of plus or minus three percentage points.

The PSI surveys have been undertaken by America Saves as part of its larger campaign to encourage and assist saving, especially by low- and moderate-income households. Over the past decade, dozens of local Saves campaigns as well as national efforts have persuaded nearly 400,000 Americans to take a savings pledge that requires specification of a savings goal, monthly dollar amount, and savings time period. America Saves also organizes the annual Military Saves Week and, with the American Savings Education Council, the annual America Saves Week, held the last week of every February for the past eight years.

Contacts: Katie Bryan, 202-939-1018; Jack Gillis, 202-737-0766

America Saves, a campaign managed by the nonprofit Consumer Federation of America, seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. The research-based campaign uses the principles of behavioral economics and social marketing to change behavior. Non‐profit, government, and corporate groups participate in America Saves nationally and through local, regional, and statewide campaigns around the country. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week. Learn more at americasaves.org and americasavesweek.org.

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“A combination of low incomes and high debts may help explain the decline in personal savings interest and effort by young adults,” noted Stephen Brobeck, Consumer Federation of America (CFA) Executive Director and a founder of America Saves. “All the data we’ve collected over the past year in our national surveys suggest that those who are struggling financially have lower levels of personal savings interest and effort,” he added.
In September 2013, January 2014, May 2014, and September 2014, America Saves commissioned national surveys undertaken by ORC International of 1000 representative adult Americans. Respondents were asked, after learning that the survey dealt with “personal saving for goals ranging from a rainy day fund to retirement,” to rate their personal savings interest, effort, and effectiveness on a ten-point scale. ORC International reported averages and distributions of responses. The company conducted the surveys by landline and cell phone. The surveys had a margin of error of plus or
minus three percentage points.

The four surveys revealed other important findings about savings interest, effort, and effectiveness. With one major exception, for the whole population during the past year, there was little change in the three PSI values. In September 2013, savings interest was 71 percent, savings effort was 62 percent, and savings effectiveness was 58 percent. In September 2014, interest was 71 percent, effort was 62 percent, and effectiveness was 60 percent. The slight rise in effectiveness was not statistically significant but may hint at an improvement in general economic conditions.

The one major exception to this consistency was lower interest (65%), effort (58%), and effectiveness (56%) found in the January 2014 survey. These lower numbers probably reflect the fact that, after the holiday season, Americans are less focused on saving and more focused on paying bills and debts accumulated in November and December.

Among the four major regions of the country – Northeast, Midwest, South, and West – savings interest (77%), effort (67%), and effectiveness (63%) were highest in the West. That was also the case in the three earlier surveys. The higher one’s income, the greater one’s savings interest, effort, and
effectiveness. In September 2014, those with household incomes below $25,000 had interest of 61 percent, effort of 53 percent, and effectiveness of 52 percent, while those with incomes above $100,000 had interest of 80 percent, effort of 73 percent, and effectiveness of 68 percent. “Clearly one’s financial resources have a great impact on savings interest and reported effort and effectiveness,” said CFA’s Brobeck. “The lower one’s income, the more likely one is preoccupied with paying bills and convinced one cannot afford to save,” he added.

America Saves Expands Efforts to Encourage and Facilitate Saving by Young Employees

America Saves is promoting saving at work for young adults as one effort to increase overall workplace saving. Over the past three summers, America Saves has begun its work in this area with a large and vulnerable population, young first-time summer workers from low-income households. “These young people are inexperienced about personal finance and are less likely to save any of their earnings,” said George Barany, America Saves Director of Financial Education. “We’re setting them up with the same system millions of adults use to save. Why not give them the same opportunities to save money that we have?”

Through this program, young employees are encouraged to save a portion of their paycheck through direct deposit by identifying a savings goal, committing to save a portion of their paycheck towards that goal, and setting up direct deposit into an existing or new account. This past summer, America Saves expanded from three cities to 13 cities across nine states where 3,962 youth pledged to save $2,772,707.46.

Contacts: Katie Bryan, 202-939-1018; Jack Gillis, 202-737-0766

America Saves, a campaign managed by the nonprofit Consumer Federation of America, seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. The research-based campaign uses the principles of behavioral economics and social marketing to change behavior. Non‐profit, government, and corporate groups participate in America Saves nationally and through local, regional, and statewide campaigns around the country. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week. Learn more at americasaves.org and americasavesweek.org.

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“The low savings interest, effort, and effectiveness in January is probably related to holiday spending that served as a distraction and also made it difficult for many to save,” said Stephen Brobeck, Executive Director of the Consumer Federation of America and a founder of America Saves.  “However, in each of the three periods, there was a consistent and predictable relationship between interest, effort, and effectiveness.  Not all those with interest in saving make the effort, and not all those who make the effort are successful,” he added.

In May, there were some notable statistically significant demographic differences in relation to saving interest – women (74%) vs. men (68%); New England (76%) vs. West (66%); and African-American (80%) vs. whites (69%).  But these differences generally did not extend to effort or effectiveness.  On these latter two measures, there were few differences between demographic groups.

As in the two earlier surveys, there were significant differences among income groups, with the gap between the lowest income group (under $25,000 annually) and highest income group ($100,000 and above) being especially large – on saving interest, 60% vs. 80%; on saving effort, 50% vs. 77%; and on saving effectiveness, 43% vs. 74%.

“The lower one’s income, the harder it is to save, and this difficulty appears to depress saving effort and even saving interest,” noted CFA’s Brobeck.

The PSI measures responses by a representative sample of 1000+ adult Americans to three questions about “personal saving related to goals ranging from an emergency fund to retirement.”  ORC International has conducted the surveys for America Saves using phone calls both to landlines and cell phones.  The margin of error is plus or minus three percentage points.

America and Military Saves Weeks Grow Organizational Interest in Promoting Saving

The eighth annual America Saves Week and Military Saves Week, both the last week in

February, revealed growing organizational interest in encouraging and assisting personal saving.  This year, 1,330 organizations, from 48 states, signed up to participate in America Saves Week — up from 1,052 in 2013.  These organizations included federal, state, and local government agencies, employers, nonprofits, and financial institutions.

M&T Bank, for example, had 17,650 customers who agreed to identify a current or future savings goal, then actively promoted saving through direct communication to approximately 500,000 customers. Through the America Saves Week effort, the bank established more than 3,000 new savings relationships with customers. And Liberty Bank in Middletown, Connecticut used in-branch signage and social media to open 771 new accounts. They also asked employees to take the America Saves Pledge to Save.

Military Saves Week, endorsed by the Chairman of the Joint Chief of Staffs, involved all four branches of the military, with participation by 470 installations, commands, and detachments.  In addition, 125 financial institutions and 66 non-profit organizations joined the effort.

As a result of these efforts, more than 20,000 personnel signed the Military Saves Pledge to save, and many opened new accounts or added to existing accounts.  Just at the naval and air force bases in Guam, according to the base reports to Military Saves, more than 200 persons opened new accounts and more than 1,000 added to existing accounts.

“While there are thousands of additional organizations that can benefit from participating in America Saves Week, we are making progress and will continue working hard,” said Nancy Register, Associate Director of the Consumer Federation of America and Director of America Saves. “We have brought together all kinds of organizations and all kinds of people, and we believe that at some point their enthusiasm for saving will prove infectious in a major way,” she added.

America Saves, a campaign managed by the nonprofit Consumer Federation of America, seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. The research-based campaign uses the principles of behavioral economics and social marketing to change behavior. Nonprofit, government, and corporate groups participate in America Saves nationally and through local, regional, and statewide campaigns around the country. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week. Learn more at americasaves.org and americasavesweek.org.

Military Saves, a component of the nonprofit America Saves and a partner in the Department of Defense’s Financial Readiness Campaign,  that seeks to motivate, support, and encourage military families to save money, reduce debt, and build wealth. The research-based campaign uses the principles of behavior economics and social marketing to change behavior. Military Saves encourages all servicemembers, their families, and civilian employees to take the Military Saves pledge and for organizations to promote savings year-round and during Military Saves Week. Learn more at militarysaves.org.

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