Many workers are living paycheck-to-paycheck, with about one in three citing debt as one of the main reasons why, according to a PYMNTS study.
As of December, 60% of survey respondents reported living paycheck-to-paycheck. This is down slightly from 2022 when 64% of respondents lived paycheck-to-paycheck.
Certain income brackets saw different changes in how far their income stretched during the pandemic. More high-income consumers found themselves living paycheck-to-paycheck at the end of 2022 — 51% reported doing so. That number went down throughout 2023, with 44% now living paycheck-to-paycheck.
As the number of higher-income earners living month-by-month decreased, optimism rose for the coming year. PYMNTS data showed that nearly half of respondents with higher income levels foresee 2024 being a better year for their finances.
Understandably, lower-income earners aren’t as optimistic. Only 32% of low-income consumers felt positive about where their finances are headed this year.
Consumers of all income brackets said lower interest rates would improve their finances, the PYMNTS study found.
To get yourself out of debt and the paycheck-to-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 for you, based on your credit score and credit history.
MANY CONSUMERS CARRYING A CREDIT BALANCE KNOW IT’S A BAD IDEA: SURVEY
Credit card debt is becoming more difficult for consumers to pay down
Household debt has reached well into the trillions, hitting $17.5 trillion in the fourth quarter of 2023, the Federal Bank of New York found. Credit card debt makes up a large portion of that with balances reaching $1.13 trillion.
Many Americans with credit card debt carry high balances. The average debt owed is about $7,931, compared to about $6,320 in 2022, according to a New York Life report. And consumers are finding it difficult to make higher credit card payments. About a quarter of respondents to the New York Life report paid less toward their credit cards in 2023.
“Our data clearly show that having a financial strategy is a key factor in not only feeling confident about reaching one’s goals, but in actually reaching them,” said Donn Froshiesar, New York Life head of consumer insights.
Gen Zers and Millennials are more likely than other generations to seek out these financial strategies to help cope with their high levels of debt.
“But despite evidence of strong habits, debt is still getting in their way. Gen Zers ranked credit card debt as the second most impactful factor on their finances in 2023 behind inflation,” Froshiesar said.
High-interest debt can hold you back, causing serious financial stress. To get a sense of what debt consolidation loan options are available to you, visit Credible to compare rates and lenders.
CONSUMER SPENDING AND DEBT ARE UP AS US ECONOMY BEGINS REBOUND
Credit card and loan delinquencies on the rise
Since consumers are having a more difficult time making a dent in their credit card debt, delinquency rates are going up. In 2023, 8.5% of credit card balances entered delinquency, a Federal Bank of New York report found.
Consumers saw other loans enter delinquency last year at a higher rate as well. About 7.7% of auto loans transitioned into delinquency.
“Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels,” said Wilbert van der Klaauw, New York Fed economic research advisor. “This signals increased financial stress, especially among younger and lower-income households.”
All age groups saw delinquencies increase, but younger borrowers saw the highest increase.
If you’re interested in consolidating or refinancing debt, it can help to have experienced loan officers on your side. Visit Credible to get all your loan consolidation and refinancing questions answered.
NEW STUDENT LOAN LAWS CAN HELP BORROWERS MANAGE BETTER IN 2024
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