A new report has found that as debt rates have climbed to pre-recession levels, minority consumers are struggling to reach financial parity.
A report from Packaged Facts, “The Financial Services Market: African Americans and Hispanics, as of 2018,” found that while 70 percent of U.S. adult consumers don’t like the idea of being in debt, consumers have gradually added debt to their balance sheets.
For the most part, the added debt doesn’t appear to be hurting Americans. In fact, numbers from the Federal Reserve show that consumer debt — which includes credit cards, auto loans, student loans and personal loans — is expected to hit $4 trillion this year. But the debt has been made manageable in part because wages are increasing, the U.S. economy is growing and the unemployment rate is currently at a 50-year low.
However, that feeling of financial security eludes many minority consumers. Data from Packaged Facts shows that African American consumers are 28 percent less likely than the average U.S. consumer to feel financially secure, which often leads to viewing debt as a necessary evil. In fact, African Americans are 16 percent less likely than the average consumer to view being in debt in a negative way. In turn, Hispanic consumers are 15 percent less likely than the average U.S. consumer to feel financially secure, and are more likely than average to say they are not skilled at saving money.
“Because of this, Packaged Facts sees opportunity for financial institutions to play an important role for these multicultural consumers by offering tailored money management solutions, helping them build financial security, and provide savings-building options that build consumer confidence,” the company wrote in a press release. “This type of marketing can start with everyday account and payment products, which both reaches the widest swath of consumers and provides institutions with opportunities to upsell candidates in the bargain.”