Consumers cutting back on spending amid inflation

Nearly a third of consumers are cutting back on spending due to inflation, and a higher percentage say they have made changes to their financial priorities.

That’s according to TD Bank’s new 2024 Consumer Spending Index, which found that 30% of respondents have been cutting back spending due to concerns about the economy, and 42% respondents have altered their financial priorities over the past year. Among those whose priorities have shifted, 27% report covering daily living expenses such as groceries and utilities is the priority that has changed the most.

The survey revealed that half (50%) of respondents say their spending has increased the most on groceries over the last year, and more than half (58%) say they spend the most money on groceries in a typical month.

Two-thirds (67%) of those surveyed revealed that some aspect of their finances keeps them up at night, and less than one-third (31%) are planning a major purchase in the next year. Despite these concerns, TD Bank says Americans remain overwhelmingly confident in their financial situations, with 85% indicating they are confident in their ability to manage their finances.

[Read more: White House addresses ongoing grocery inflation woes]

"The daily cost of living is rising for many Americans," said Chris Fred, head of credit cards and unsecured lending at TD Bank. "Fortunately, there are useful tools available to help consumers manage their finances and maximize card benefits, whether that's by finding a card with cash back on groceries or by identifying a card with low interest if you know you are going to carry a balance."

Other insights from the survey include the following:

• The majority of respondents have multiple credit cards, with 47% of respondents reporting they hold three or more cards. Rewards cards continue to dominate the credit card space with more than eight in ten consumers (83%) having one. 
• When it comes to choosing a new card, consumers are most enticed by the rewards program structure (34%), attractive introductory offers (33%) and the reputation of the card issuer or financial institution (24%).
• Consumers are relatively split between credit and debit as their primary method for making day-to-day purchases, with 43% using a credit card and 39% using a debit or check card tied to a checking account. TD Bank says the preference for credit cards is driven by several compelling factors including convenience (64%), the opportunity to maximize rewards (60%) and enhanced security on purchases (46%). Only 10% of respondents report cash as their primary spending method.
• Consumers have been hesitant to embrace Buy Now Pay Later (BNPL) options with only 28% of respondents having used BNPL installment options. The use of BNPL is particularly popular among millennials, with 45% having used this service compared to just 16% of baby boomers. Those who do use BNPL often cite the ability to spread out payments for items that wouldn't otherwise fit their budget (47%) and the appeal of low or no interest rates (23%).

TD Bank’s report featured an online Caravan survey conducted by Big Village Insights among a sample of 1,510 U.S. adults ages 18 years old and older that have a credit card.

This story originally appeared on Chain Store Age.