70 Percent of Consumers Report Taking
Additional Measures to Manage Credit Card Debt In the Last 12
Months
SAN
FRANCISCO, Feb. 28, 2023 /PRNewswire/
-- LendingClub Corporation (NYSE: LC), the parent company of
LendingClub Bank, America's leading digital marketplace bank, today
released findings from the 19th edition of the Reality
Check: Paycheck-to-Paycheck research series, conducted in
partnership with PYMNTS. The Debt and Credit Deep Dive Edition
examines the impact of U.S. consumers' 2022 holiday spending on
their credit card debt.
Today's Paycheck-to-Paycheck Landscape
As of January 2023, 60% of
United States adults, including
more than four in 10 high-income consumers, live paycheck to
paycheck, down 4 percentage points from January 2022. This decrease suggests that
spending cutbacks in the previous year have effectively improved
some consumers' financial situations.
Moreover, consumers appear to be settling into the current
financial environment. For example, the share of consumers
expecting their financial situation to worsen has also decreased,
and more people are optimistic about 2023.
"Consumers living paycheck to paycheck dropped for the first
month of 2023. While it's too early to indicate a trend, consumers
have accepted that inflation is part of their everyday lives and
they are actively making behavior changes, especially during the
2022 holiday shopping season, to adjust their spending and better
manage their cash flow," said Anuj
Nayar, financial health officer at LendingClub.
The increase in consumer optimism comes at the expense of
discretionary spending. Consumers approached the 2022 holiday
shopping season with a much more conservative stance. As reported
in November 2022, 15 million
consumers said they would refrain from making holiday-related
purchases, a 10% decrease compared to 2021.
Consumers' Approaches to Managing Credit
Credit cards are a popular choice for consumers in periods of
high spending. For example, 72% of consumers used a credit card for
at least one 2022 holiday purchase. Even with increased credit card
use during high periods of spending, 87% of cardholders report that
they are not experiencing a significant financial hangover from
their 2022 holiday season spending, while 13% reported that the
holiday season brought a very or extremely significant increase in
their debt burden.
As consumers adapt to today's inflationary pressures, managing
credit card debt is top of mind, especially among those living
paycheck to paycheck. In the last year, 70% of all surveyed
cardholders reported taking at least one measure to help manage
credit card payments. Among those living paycheck to paycheck, the
share of consumers adjusting how they use credit cards rises to 90%
among those with issues paying bills and 81% among those without
issues paying bills. Budgeting and reducing spending were common
strategies: 32% of cardholders adjusted their budgets, and 31%
lowered their spending.
Even as consumers adjust their spending behavior to meet the
challenges of the current economic environment, there remains a
financial backlog they will carry into the foreseeable future. The
average consumer holds outstanding credit card balances equivalent
to 35% of their available savings, but those living paycheck to
paycheck tend to have higher credit card debt relative to their
savings level. The data finds that consumers living paycheck to
paycheck without issues paying bills have average outstanding
credit card balances equivalent to 62% of their available savings,
while those with issues paying monthly bills carry balances of 157%
of their available savings, meaning they would still have a balance
even if they emptied their savings accounts.
"While consumers are making behavioral changes as they adapt to
inflationary pressures on their pocketbooks, it may not be enough
to balance their finances," continued Nayar. "Consumers across the
income spectrum carry massive credit card balances and with
interest rates for debt growing, outstanding debt balances could
equal all paycheck-to-paycheck consumers' savings balances in the
next five years1. For consumers looking to decrease
their overall debt burden, now is a good time to consider
consolidating and/or refinancing that debt into an installment
loan."
To view the full report,
visit: https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-credit-card-management-budget-debt/
Methodology
New Reality Check: The Paycheck-to-Paycheck Report — The Debt
and Credit Deep Dive Edition is based on a census-balanced survey
of 4,163 U.S. consumers conducted from Jan.
6 to Jan. 27, as well as analysis of other economic data.
The Paycheck-To-Paycheck series expands on existing data published
by government agencies, such as the Federal Reserve System and the
Bureau of Labor Statistics, to provide a deep look into the core
elements of American consumers' financial wellness: income,
savings, debt and spending choices. Our sample was balanced to
match the U.S. adult population in a set of key demographic
variables: 51% of respondents identified as female, 31% were
college educated and 36% declared incomes of more than $100,000 per year.
About LendingClub
LendingClub Corporation (NYSE: LC) is the parent company of
LendingClub Bank, National Association, Member FDIC. LendingClub
Bank is the leading digital marketplace bank in the U.S., where
members can access a broad range of financial products and services
designed to help them pay less when borrowing and earn more when
saving. Based on more than 150 billion cells of data and over
$80 billion in loans, our advanced
credit decisioning and machine-learning models are used across the
customer lifecycle to expand seamless access to credit for our
members, while generating compelling risk-adjusted returns for our
loan investors. Since 2007, more than 4.5 million members have
joined the Club to help reach their financial goals. For more
information about LendingClub, visit
https://www.lendingclub.com.
CONTACT:
For Investors:
IR@lendingclub.com
Media Contact: Press@lendingclub.com
PYMNTS Contact: information@PYMNTS.com
1 This assumes a 5-percentage-point spread in
interest rates on outstanding debt balances compared to savings
balances.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/60-of-americans-now-living-paycheck-to-paycheck-down-from-64-a-month-ago-301757630.html
SOURCE LendingClub Corporation