Approximately 60% of consumers live paycheck to paycheck, primarily through debt and inflation. (iStock)
Many workers are living paycheck to paycheck, with around one in three citing debt as one of the main reasons. According to a PYMNTS study.
As of December, 60% of survey respondents said they were living paycheck to paycheck. This is a slight decrease from 2022, when 64% of respondents were living paycheck to paycheck.
Certain income brackets have seen different changes in how much their incomes have grown during the pandemic. By the end of 2022, more high-income consumers found themselves living paycheck to paycheck. 51% reported doing so. This number has decreased throughout his 2023, with 44% now living paycheck to paycheck.
Optimism for next year grew as the number of high-income people living month-on-month decreased. According to PYMNTS data, nearly half of respondents at higher income levels expect 2024 to be a better year for household finances.
Unsurprisingly, lower-income groups are less optimistic. Only 32% of low-income people feel positive about the direction of their household finances this year.
A PYMNTS survey found that consumers across all income brackets believe lower interest rates would improve their household finances.
To break out of the debt-paycheck cycle, consider consolidating your debt into a low-interest personal loan. Visit Credible to compare debt consolidation options and find the best personal loan option based on your credit score and credit history.
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Paying off credit card debt is becoming increasingly difficult for consumers
Household debt will reach trillions of dollars, reaching $17.5 trillion in the fourth quarter of 2023. New York Federal Bank discovered. Credit card debt accounts for the bulk of this, with outstanding balances reaching $1.13 trillion.
Many Americans with credit card debt carry large balances. The average debt is about $7,931, but in 2022 it’s about $6,320. According to a report in New York Life. And consumers are finding it harder to make large payments with credit cards. About a quarter of respondents to New York Life’s report said they spent less on their credit cards in 2023.
“Having a financial strategy is a key element in not only feeling confident that you can achieve your goals, but actually achieving them,” said Don Flosseser, Head of Consumer Insights at New York Life. That’s clear from our data.”
Gen Z and Millennials are more likely than other generations to explore these financial strategies to deal with high debt.
“But despite evidence of strong habits, debt still stands in their way. Gen Z cites credit card debt as the second-biggest impact factor on their finances in 2023, behind inflation. ,” Frothesser said.
High-interest debt can interfere with your life and cause severe financial stress. To understand what debt consolidation loan options are available to you, visit Credible to compare interest rates and lenders.
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Increase in credit card and loan delinquencies
Delinquency rates are rising as consumers find it increasingly difficult to pay off their credit card debt. In 2023, 8.5% of credit card balances were in delinquency. New York Federal Bank report revealed.
Consumers saw other loans delinquent at similarly high rates last year. Approximately 7.7% of auto loans fell into delinquency.
“Transitions into delinquency on credit cards and auto loans remain above pre-pandemic levels,” said Wilbert van der Klaue, economic research advisor at the New York Fed. “This indicates increased financial stress, especially among young people and low-income households.”
Delinquencies increased across all age groups, but the largest increase was among younger borrowers.
If you’re interested in consolidating or refinancing your debt, it can be helpful to have an experienced loan officer on your side. Visit Credible to get all your loan consolidation and refinance questions answered.
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