More Americans are living paycheck-to-paycheck due to high inflation and rising costs, a recent survey said.
More than half (60%) of U.S. consumers said they were living paycheck-to-paycheck in August, according to the survey from LendingClub and PYMNTS. That’s up from 57% of people who said the same about a year ago.
Even affluent Americans are feeling the sting of inflation, the survey said. Forty-five percent of respondents who earn more than $100,000 a year said they were stuck in the paycheck-to-paycheck cycle, an increase from 38% last year. Of those earning $50,000 to $100,000, about 62% said they were stuck in this cycle, up from 57% last year.
“More consumers living paycheck to paycheck indicates that many are continuing to lose their financial stability,” Anuj Nayar, LendingClub’s financial health officer, said. “Yet, the share of consumers living paycheck to paycheck with issues paying their bills has dropped 7 percentage points in the past year. Many have moved to what now may constitute a stable lifestyle: living paycheck to paycheck but still managing to pay your monthly bills. There is just nothing left over at the end.”
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Rising food and gas prices hit the hardest
Amid high inflation, the most significant impact on Americans’ finances was the rising costs for food and fuel, according to the survey.
The majority (83%) of respondents said they saw very or extremely considerable increases in fuel prices, and 69% said the same about the cost of grocery purchases.
Higher prices have impacted how Americans manage and spend money, with more than half (60%) of all consumers having reported making an adjustment to their budgets, the survey said. Of those respondents, 30% said they made “very or extremely significant changes.”
“Consumers across financial lifestyles cited increases in products or bills at similar rates, but consumers who struggled financially were more likely to consider such increases to be widespread and distressing,” the survey said.
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Reliance on credit products grows
Americans living paycheck to paycheck have relied on credit products more to fund their spending, the survey said. Credit cards topped the list of financial products used across all consumer groups, according to the report.
At least one-quarter of respondents saw interest rates on select credit products rise in the last six months, yet many said they had not noticed the additional financing costs, according to the survey.
“It is no secret that prices have been increasing for everyday Americans – not only in the goods and services they purchase but also in the interest rates they’re paying to fund their lives,” Nayar said. “While Americans are modifying their spending in light of inflation, there is still a disconnect with many not yet seeing the true cost of credit products.
“This can have detrimental consequences for someone who pays the minimum amount on their credit cards every month,” Nayar continued.
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