As inflation soars, here are Americans’ most common household bills

As Americans grapple with the highest inflation in a generation, a look at consumer spending habits reveals where families are seeing the biggest price increases

The typical household spends $2,000 a month to pay their bills, according to data from bill payment service doxo first shared with CBS MoneyWatch. About a third of a typical household’s budget is spent on bills, the company found.

What varies greatly is how bills are paid – some types of expenses are often paid in cash, while others are usually paid by credit card. Customers are strategic about when and how they make payments, research has shown.

who, what, how

According to Jim Kreyenhagen, head of marketing and consumer services at doxo, consumers often think that their preferred method of payment, whether by bank transfer, credit card or sending a check, is the default payment method. . But people pay their bills in many ways.

“How consumers pay their rent or their mortgage bill is very different from how they pay their utility bill,” he said.

Consumers generally avoid using cash to pay their bills except for rent – ​​20% of people pay their rent in cash, Doxo found. Meanwhile, consumers are twice as likely to use a credit card to pay a gas bill than for car insurance.

While mobile payment options are becoming much more popular for purchases, they are very rare for bill payments, with consumers reporting using mobile payment options for bills less than 2% of the time.

Late payments

While the typical household in Doxo’s dataset pays 10 recurring bills, many people also put off at least one, Doxo found. Each month, approximately 15% of bill payers delay a payment.

This number increased at the start of the coronavirus pandemic: In 2020, around 4 in 10 households reported delaying payment of an invoice. Of those who did, more than two-thirds said they deferred a utility bill.

Decisions about which payments to delay likely reflect consumer calculations about how long it takes utility companies to respond to missed payments, Kreyenhagen said.

“If I make a decision on the bill that I’m going to delay, we all know utility companies are pretty lenient,” he said. “If I skip a bill, my electricity doesn’t cut out right away… But we also know that if you skip a payment on your rent or your mortgage, it’s expensive.”

More inflation is coming

Economists expect inflation to remain well above the Federal Reserve’s 2% target this year. But higher prices won’t be reflected on all bills, Kreyenhagen said.

For example, higher mortgage rates will not affect customers who are already paying mortgage and home insurance costs. car insurance rates, which also jumped, will likely be reflected later this year and next year as existing customers renew their policies. On the other hand, utility costs — which have already risen for many — are likely to rise even more, Kreyenhagen said.

“We think public services will increase – we already see an indication of that,” he said. “It depends on fuel prices.”

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