Inflation has become a growing concern for middle-income Americans, impacting their ability to save money. A recent survey by Santander USA revealed that during the second quarter of 2023, more individuals reported a decrease in savings compared to the previous quarter.
Despite these challenges, Americans remain optimistic about their economic prospects. Many are considering moving their funds to higher interest-paying options such as certificates of deposits or money-market accounts, in an effort to counteract the impact of inflation.
Furthermore, customers are continuing to show loyalty to their respective banks, even amidst the recent closures of Silicon Valley Bank, Signature Bank, and First Republic.
The survey found that 73% of middle-class Americans reported being unable to save as much as they would like due to inflation. This is an increase from the 67% reported in the first quarter.
Additionally, 68% of respondents stated that they have made significant cuts to their household spending in response to inflation. This is up from 60% in the first quarter.
These findings were part of Santander USA's Q2 Paths to Prosperity survey, released on Monday.
Despite concerns about inflation, consumers are remaining resilient thanks to a strong job market in the United States. Approximately 68% of respondents indicated that they feel they are on the right track towards achieving their financial goals – a figure largely unchanged from three months ago.
Tim Wennes, CEO of Santander USA, expressed optimism about the current state of the economy. He emphasized that employment remains strong and consumer spending appears to be holding up.
As a result, Santander USA has observed a significant increase in customer interest for accounts with higher interest rates. This trend is driven by the fact that savings rates are currently at their highest levels in approximately 15 years.
Less than a Third of Consumers in the US Take Advantage of High-Yield Accounts
According to recent data, only around 32% of consumers have moved their money into high-yield accounts to benefit from the higher interest rates. However, experts believe that this figure is expected to increase in the near future.
The survey, conducted by Santander USA, included questions related to perceptions of the banking industry and stability. This was in response to the turmoil faced by the banking sector in 2023 after the collapse of Silicon Valley Bank and two other banks.
Despite the troubles in the banking industry, only 5% of middle-income Americans switched their banking providers. The survey suggests that customers remained loyal to their bank due to their trust and confidence in them.
The data for the survey was gathered from 2,213 middle-income Americans. This marks the second study conducted by Santander USA, with plans to continue conducting it on a quarterly basis.
Santander USA primarily serves middle-income customers, with 70% of its customer base falling within the middle-income bracket, reporting incomes between $50,000 and $150,000.
Also read: Santander looks to build up U.S. business as regional powerhouse but not a megabank