Experian-Gallup Survey Shows Most Consumers Are Optimistic About Their Financial Situation for 2006

With the new year approaching, most consumers have a decidedly upbeat outlook. According to the latest Experian-Gallup Personal Credit Index(SM) survey, 68 percent of consumers say they are optimistic about their financial situation in the coming year, including 30 percent who are “very” optimistic. More results for the Personal Credit Index(SM) can be found at www.PersonalCreditIndex.com.

“These positive views reinforce the modest increase in consumers’ assessment of their credit situation this month,” said Ed Ojdana, group president of Experian Interactive(SM). “The Experian-Gallup Personal Credit Index is up 11 points from last month’s record low of 74. December’s level of 85 represents the index’s highest level since August, ending the year on a relatively high note.”

Other positive expectations for the coming year include higher pay, promotion and an improved credit score. A majority of employed consumers, 57 percent, look forward to earning more money next year than this past year, while only 6 percent expect to see a decline in their pay. Thirty percent of workers also anticipate getting a promotion. More than a third of consumers, 36 percent, hope to earn a higher credit score, while just 2 percent think their score may decline. The rest expect it to remain about the same.

When thinking about the new year, consumers anticipate the following: making home improvements (50 percent), paying off all their debt (38 percent), buying a new car or other vehicle (21 percent), moving to a new place at least 10 miles away (20 percent), going back to school (19 percent), getting a new job (18 percent), buying a new home (13 percent) and, among those with a mortgage, refinancing their home (6 percent).

The decision to go back to school is highly correlated to age, with almost half of consumers (47 percent) under age 30 anticipating more studying in the coming year, compared with 24 percent of consumers in the 30 to 49 age group and just 4 percent of consumers age 50 and older.

The under-30 consumers also are more likely than older consumers to be looking for a new job, moving to a new location and buying a new car. Thirty- nine percent of younger consumers expect to find a new job next year, compared with just 14 percent of consumers 30 and older. Also among young consumers, 44 percent expect to change residence and 32 percent look forward to buying a new car, compared, respectively, with just 15 percent and 18 percent of older consumers anticipating such changes.

On a separate issue, the poll found that 14 percent of consumers who have a credit card pay only the minimum amount, in effect using the card as a high-interest loan. In a similar Experian-Gallup poll last December, just 7 percent of consumers used their credit card that way.

“It’s worrisome that twice as many consumers are using their credit in this fashion compared to last year,” said Dennis Jacobe, chief economist for The Gallup Organization. “The past year’s devastating natural disasters, general price increases and record energy costs may have caused more consumers to put day-to-day items on their credit card, and they haven’t caught up with their finances. This also could be the result of the increase in minimum credit card payments by credit card issuers. Nevertheless, the proportion of consumers who are uncomfortable with their level of debt remains at about one in four — 26 percent expressing that concern this year, 25 percent last year.”

The overall amount of credit card debt has declined slightly since last year. Currently, the average debt is $4,072; last year it was $4,243. About a third of consumers report credit card interest rates at 15 percent or higher — no change from last year.

In looking to how housing prices and gas prices will fare in the new year, after meteoric rises this past year, consumers appear relatively sanguine. While more than half, 53 percent, expect both to be higher, only 16 percent expect gas prices to be “much higher,” and just 14 percent expect the same of housing prices.

More information about the Experian-Gallup Personal Credit Index can be found on the official Web site at www.PersonalCreditIndex.com.