Approximately 74 percent of Americans are not willing to borrow money despite a recent pledge by the Federal Reserve to keep interest rates low until mid-2015, according to a new report form Bankrate.com.
Bankrate’s findings were released in conjunction with its monthly Financial Security Index results. The index has rebounded from a 2012 low of 96.6 in September to 99.2 in October, its highest level since June.
The rebound, however, does not put the index into positive territory, which would require a number higher than 100. Anything below 100 indicates deteriorating financial security over the previous 12 months. The index has remained below 100 for 21 of the 23 months since it was implemented in Dec. 2010.
“Recent stock market returns, housing data and the latest jobs report all have Americans feeling a bit better about their finances, but more progress is needed in order to achieve sustainable long-term improvement,” Greg McBride, Bankrate’s senior financial analyst, said. “When asked about their overall financial situation now versus one year ago, slightly more Americans said it is worse now (25 percent) than better (24 percent). And the negativity is particularly pronounced among retirees: just 16 percent say they are better off today. That’s the same reading as the unemployed.”
The job security, savings, debt and overall financial situation components of the index improved over the past month, while the net worth component held steady.
Additionally, the report showed that 31 percent of full-time employees were reporting better overall financial security compared to one year ago, while one-third of households with income of $50,000 or more per year reported an improved overall financial situation compared to the previous year.