(DailyDig.com) – A recent poll found that the majority of Americans, more than 62 percent, are living from one paycheck to the next and have accumulated significant amounts of debt on credit cards.
According to the survey, those who live paycheck-to-paycheck are more than two times as likely to have credit card debt from one month to the next compared to those who do not live payday to payday. Nearly one-third reported using all of their available credit at some point in the last year, with an average spending of $9,200.
According to a recent study by the Federal Reserve Bank of New York (New York Fed), Americans spent an additional $48 billion in 2023’s third quarter, bringing their total credit card debt to $1.08 trillion.
The PYMNTS and LendingClub polls found that 62 percent of customers were dependent on their next salary to meet their monthly financial obligations as of November 2023. Additionally, these customers often own two credit cards and account for approximately 60 percent of all U.S. credit card holders.
Credit cards trap a lot of people in debt, according to Alia Dudum, the Money Expert from LendingClub. Those who use their cards but don’t pay them off completely each month (revolvers) wind up subsidizing the benefits gained by those who do. Revolvers need more efficient methods to pay down current debt and fill cash flow gaps.
Debt is increasing for the majority of Americans. The New York Fed reported that balances on credit cards increased by $154 billion over the previous year, marking the largest annual gain since 1999. Total debts rose $786 billion from the previous year, with vehicle loan obligations increasing by $71 billion, continuing a rising trend that began in 2011 and reaching $1.6 trillion.
More and more people are falling behind on their loan payments, says the New York Fed. With the exception of HELOCs and student loans, credit card delinquencies increased across the board. Credit card delinquencies rose most dramatically among borrowers aged 30–39.
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