As rising inflation continues to wreak havoc on the U.S. economy, a new study by LendingClub Corp (NYSE:LC) has determined nearly two-thirds of Americans are now living a paycheck-to-paycheck existence.
What Happened: According to the ninth edition of the "Reality Check: Paycheck-To-Paycheck" research series conducted by LendingClub in partnership with PYMNTS.com, 64% of the U.S. population, or about 166 million adults, were in a paycheck-to-paycheck situation as of March. And this dilemma spans all income brackets and credit worthiness levels — indeed, the study found one-quarter of Americans living paycheck-to-paycheck have credit scores above the FICO average of 750.
The study also found that paycheck-to-paycheck consumers were three times as likely to revolve credit card debt and carry higher monthly balances overall, with 29% of credit card holders stating they "always" or "usually" revolve their balances. Struggling consumers also tend to nearly exhaust the average credit card spending limit of $4,700, declaring an average balance of $3,800.
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Why It Matters: "The number of people living paycheck to paycheck today is reminiscent of the early days of the pandemic and it has become the dominant lifestyle across income brackets," said Anuj Nayar, financial health officer at LendingClub. "As inflation we have not seen in a generation takes more of our paychecks for everyday needs, Americans across incomes and credit scores are increasingly relying on credit products just to get by. That is why the financial services industry must offer better tools to help bridge the gap."
Ahead of Wednesday’s expected announcement of yet another rate hike by the Federal Reserve, Nayar recommended financially strapped consumers “consider looking at any credit you have with a variable interest rate. Many of LendingClub's 4 million members have already refinanced their variable interest rate credit card balance into a lower cost fixed-rate loan so they can responsibly manage their debt obligations."
The new study was based on a census-balanced poll of 2,326 adults conducted from March 9 to March 11, with 52% of respondents identified as females, 32% were college-educated and 36% declared incomes of over $100,000 per year.
Photo: Foto-Rabe / Pixabay
