This week, the Financial Health Network released the first brief in the new Pulse Points series, exploring receipt and usage of stimulus payments and tax refunds in the first few months of 2021. To learn how these trends are affecting consumers’ ability to keep up with their bills, Thea Garon, Senior Director of the Financial Health Pulse, caught up with Liz Powell, Head of Marketing Communications & Insights at doxo, a bill payment company that helps more than 5 million consumers pay household bills to approximately 100,000 service providers across the nation. This interview has been edited for length and clarity.
For millions of Americans across the country, paying bills can be a stressful part of one’s financial life. The COVID-19 pandemic has made this even harder.
Liz, I want to begin by asking you to describe what you’ve observed about how people have been managing their money and paying their bills over the course of the pandemic.
Across the board, we’ve found that it’s been a challenging year. Back in October, we released our doxoINSIGHTS Bill Pay Impact Report, which showed that about 42% of Americans had missed bill payments due to COVID-19.
Once the stimulus checks started appearing, we asked our users how this would impact them and how they planned to use the money. We found that consumers felt like the stimulus checks would help and that they planned to use the money, not for discretionary spending, but to pay their bills.
One of the main bills they said they were going to pay was utilities. Nearly 80% of respondents said that they would spend the money on utilities, 35% said they would spend the money on cable and internet, 33% said rent, and 32% said mortgage payments. A lot of utility bills have actually increased, so we believe that people were either delaying their payments or that those bills were becoming higher, so they were only paying part of them. There was a real indication that people wanted to get back on the right track and that these stimulus checks would help them.
We also looked at how people were actually using the money once they received it. We found that there was a 30% increase in the number of payments made on the doxo network. When we compare the same time period month-over-month, it is evident that people were receiving an influx of cash and that they were using it to pay bills.
But one of the interesting differences between what people said they would do and what they actually did was pay credit card bills. I think in hindsight, it’s pretty obvious – people were using their stimulus money to pay down debt they had accumulated over the past year. Some of our data along the way indicated that there was a massive increase in using credit cards to pay bills versus using cash.
Fascinating, rich insights. In our new Pulse Points analysis, we saw similar trends, but also found spikes in spending on healthcare expenses following receipt of stimulus payments, as well as increases to discretionary expenses, including dining.
In addition to conducting high-quality research, doxo is also a business. How have insights like these informed doxo’s business and customer strategy over the last year?
We have learned that it’s really important to make data publicly available. To take the insights that we’re learning and make sure that consumers, in addition to the media and analysts, have access to them. For the consumer, that level of transparency is key, especially in times like these.
For example, if they’re going to negotiate a bill, having access to data that tells them how much others in their community are paying for cable compared with what they’re paying arms them with something to bring to their provider. It’s important for consumers to know if they could be getting a better deal. Our goal is to make sure that information is out there for anyone to use to their advantage.
What a valuable service. Liz, many of your users are likely also customers of other Financial Health Network Member organizations, so my final question for you is: What are your parting words of advice for other Members of the Financial Health Network to help them meet the needs of their customers?
At the end of the day, it’s about paying special attention to how your users are using your product. Constantly taking the pulse, gauging their sentiments, understanding how they feel about your service, as well as how they feel about their financial health in general. From there, you can pull insights that help inform your business direction.
Thank you, Liz!