Consumer sentiment fell again in September, the Fed raised rates for the first time since 2023, and credit card and auto balances are still climbing. For bank and credit union marketers, that combination points to a first quarter where savers shop hard for rate, some borrowers start to slip, and tax refunds go to whoever asks for them first.
Sentiment keeps sliding
The University of Michigan’s final September reading came in at 48.1, down from 51.7 in August and 55.1 a year ago. It’s about 15% lower than in January and roughly 40 points below where it was in 2016.
The forward-looking parts of the survey fell faster than the headline. The Expectations Index dropped from 51.5 to 46.3 in one month. Views of personal finances, both current and a year out, fell about 10%. Year-ahead inflation expectations rose to 4.6% from 4.0% in August; in February, before the conflict with Iran pushed fuel prices up, they were 3.4%. Expectations for the economy over the next year are now at their lowest since 2022, and the drop showed up across age, income, region and party.
The Conference Board’s index moved the same direction, more gently. It fell to 89.4 in August from 90.2 in July, the second monthly decline in a row. September’s number comes out Tuesday.
One detail cuts the other way. Michigan found buying conditions for big-ticket items improved a little, because some people want to buy before prices rise further. Worried consumers aren’t necessarily frozen.
The Fed raised rates
On September 16 the Fed raised the federal funds rate a quarter point to 3.75%–4.00%, a unanimous vote. Its statement called spending resilient and the job market steady, and said inflation remains elevated.
Headline CPI was 3.4% year over year in August, with a 0.4% monthly jump after 0.1% in July. Producer prices were up 5.4% from a year earlier. The Fed’s projections put the rate around 4.00%–4.25% at the end of 2026 and roughly flat through 2027, and four officials penciled in two more hikes this year.
For deposit pricing, plan on rates holding where they are or going up through Q1, not coming down.
Household debt: flat total, shifting mix
Total household debt was $18.8 trillion in Q2, down $13 billion, according to the New York Fed. The categories moved in different directions:
| Category | Q2 2026 balance | Change from Q1 |
|---|---|---|
| Mortgages | $13.1 trillion | −$74 billion |
| Auto loans | $1.71 trillion | +$28 billion |
| Student loans | $1.65 trillion | −$7 billion |
| Credit cards | $1.26 trillion | +$21 billion |
| HELOCs | $459 billion | +$13 billion |
Overall delinquency improved slightly, to 4.7% of balances from 4.8%. But new early delinquencies ticked up for auto loans and mortgages, about 137,000 people had a new bankruptcy on their credit report, and the median credit score on new auto loans fell seven points. HELOC balances and limits have been rising since 2022, as homeowners with low-rate first mortgages borrow against equity instead of refinancing.
The personal saving rate was 3.0% in July, up from 2.6% in June. That’s not much of a buffer. August’s figure comes out September 30.
People switch more than banks assume
In Raisin’s 2026 consumer banking survey, 65% of Americans said they’ve switched banks at least once, and nearly a third have done it more than once. Among people who stay, about half say it’s because they trust their bank to be secure. One in five say they stay because all banks seem about the same.
The rate gap gives them a reason to move. The national average savings rate was 0.37% in September, per FDIC data, while top online accounts pay close to 4.00% APY.
An Openbank survey found 76% of consumers named saving as their top financial goal for 2026, and 84% of high-yield savings customers said the interest makes a real difference to them. It also found 43% of younger consumers aren’t sure which products fit their goals.
Switching is still a hassle, and about a third of consumers say so. That’s why a lot of people don’t leave outright. They keep checking where it is and open a high-yield savings account at an online bank.
What to do in Q1
Get refund campaigns out in January. Refunds start landing in February. Savers are already rate-focused, so the institutions that show a specific APY and a specific dollar example before refunds arrive will collect more of that money than the ones that wait.
Find the balances you’re most likely to lose. A customer doesn’t have to close their account to move most of their money. Pull a list of high-balance customers earning near the national average rate and offer them a competitive savings or money market option before an online bank does.
Say you’re safe, plainly. Security is the main reason customers stay. Mention FDIC or NCUA coverage, fraud protection and your local presence in brand and retention messaging. Keep the tone calm, not alarmed.
Be selective with credit offers. January brings holiday bills on top of higher card and auto balances. HELOC and consolidation offers make sense for homeowners with strong credit. For customers showing stress, lead with hardship options, budgeting tools and payment help instead.
Explain before you sell. Many younger customers don’t know which account fits what they’re trying to do. Short, specific pieces like “CD or high-yield savings?” with a clear next step will do more than another rate banner.
What could shift before January
Michigan’s researchers tied September’s drop mostly to fuel prices and trade tensions, so cheaper gas or a trade deal could lift sentiment fast. Another Fed hike would push deposit competition higher.
Releases to watch:
- Sept 29: Conference Board consumer confidence (September)
- Sept 30: BEA personal income and outlays, including the August saving rate
- Oct 9: University of Michigan preliminary October sentiment
- Oct 14: CPI for September
- Early November: NY Fed Q3 household debt report
