Main Topic: Americans' credit card debt reaches over $1 trillion for the first time ever.
Key Points:
1. Total credit card indebtedness rose by $45 billion in the April-through-June period, reaching $1.03 trillion.
2. Credit card delinquency rates have increased, with 30 or more days late climbing to 7.2% in Q2.
3. The rise in credit card balances reflects inflationary pressures and higher levels of consumption, while household income remains below pre-pandemic levels.
### Summary
🇺🇸 61% of Americans are living paycheck to paycheck, according to a new report.
### Facts
- 📊 About three-quarters of consumers earning under $50,000 and 65% of those making $50,000 to $100,000 were living paycheck to paycheck in June.
- 💰 45% of those making over $100,000 reported a paycheck-to-paycheck existence.
- 💸 Inflation, rising interest rates, and inadequate savings are cited as factors contributing to financial stress.
- 😰 52% of respondents reported feeling more financially stressed than before the COVID-19 pandemic.
The majority of Americans are unable to pay off their credit card debt in full each month, with 51% of individuals rolling over their balances and accruing interest, according to a survey by J.D. Power. This marks a significant shift from previous years and is attributed to factors such as inflation, dwindling savings, rising interest rates, and increased everyday use of credit cards.
Despite reaching record levels of total credit card debt and household debt, Americans are actually managing their debt better than in the past due to inflation masking the impact on balances and lower debt-to-deposit levels, according to an analysis by WalletHub. However, the rising trajectory of credit card debt and the increasing number of households carrying balances raise concerns, especially considering the high interest rates, which can take more than 17 years to pay off and cost thousands of dollars in interest. Meanwhile, savers have the opportunity to earn higher returns on cash due to higher inflation and interest rates.
A study shows that over 60% of Americans are living paycheck to paycheck despite the Federal Reserve's efforts to control inflation, as prices for goods and services continue to rise.
Inflation and rising interest rates have forced a majority of Americans, across all income brackets, to live paycheck to paycheck, with lower-income individuals being the hardest hit, according to a survey from Lending Club Bank.
Americans are struggling to pay their bills as inflation rises, leading to a surge in credit card and auto loan defaults, which is expected to worsen with rising interest rates and the expiration of the student loan moratorium. Low- and middle-income earners are particularly affected, resorting to using credit cards for essential purchases, while opening new lines of credit to pay off debts, resulting in record-high credit card debt. The resumption of student loan payments and potential holiday season spending add to concerns about escalating debt levels.
Approximately 75% of American workers earning up to $50,000 live paycheck to paycheck, while credit card debt has exceeded $1 trillion, making it difficult for those with debt to save; Gen Z saves more money than older generations due to their experience of the Great Recession, lack of trust in Social Security, and inclination to invest in cryptocurrency.
Almost 80% of Americans are living paycheck to paycheck and would struggle to meet their financial obligations if their paychecks were delayed by a week, according to a survey by PayrollOrg.
US credit card debt reached $1 trillion for the first time, but experts argue that it is not a cause for concern as factors like income, wealth, spending growth, credit card utilization, and delinquency rates indicate that consumers are in good financial shape unless the US enters a severe recession.
Approximately 60% of Americans are living paycheck to paycheck, facing financial challenges due to high inflation, higher interest rates, and stagnant wage growth.
About 60 percent of U.S. consumers, across all income levels, reported living paycheck to paycheck in August, with the figure remaining unchanged from the previous year, according to a new report from Pymnts and LendingClub.
Amid economic uncertainty, Americans are saving less, but continuing to spend, which may help the economy avoid a recession; however, many are struggling financially and have little to no savings, relying on credit card debt to make ends meet, and experts recommend building a larger emergency fund to navigate through potential economic contractions.
Americans have $1.2 trillion more in excess household savings than previously estimated, which could be good news for the economy as it tries to address inflation and could delay the depletion of savings until next year, according to revised government data.
Despite concerns about a weakening consumer and dwindling excess savings, American consumers are still spending, with total card spending likely up 4.5% year-over-year over the past three months, according to Bank of America.
