The number of consumers who are living paycheck-to-paycheck, meaning they are not able to put aside any money for savings or emergency funds, is back to pre-pandemic levels, according to a published report, and the financial difficulties are being felt by people on all rungs on the income ladder.
About 60% of households in the United States are living paycheck-to-paycheck, including 50% of those earning at least $100,000 annually. And about 25% of consumers who say they are living paycheck-to-paycheck have credit scores of at least 750. While some people are turning to credit to help them manage their financial situations, rising interest rates are going to cause more strain and stress in the coming months on those who are using plastic to help keep themselves afloat.
Credit card balances continue to climb and could reach record levels later this year, especially if the price of everyday staples like gas and food continue to climb. Credit card balances are more than $840 billion through the first quarter of 2022, according to data from the Federal Reserve.
“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.”
