As Rising Inflation Makes Paying Bills and Building Savings
Increasingly Difficult, More Consumers of All Income
Brackets Join Their Ranks
Paycheck-to-Paycheck Consumers are Three Times More Likely to
Revolve Credit Card Debt and Carry Higher Monthly
Balances
SAN
FRANCISCO, May 2, 2022 /PRNewswire/ -- LendingClub
Corporation (NYSE: LC), the parent company of LendingClub
Bank, America's leading digital marketplace bank, today released
findings from its ninth edition of the Reality Check:
Paycheck-To-Paycheck research series, conducted in partnership with
PYMNTS.com.
The Credit Edition examines the growing shares of U.S. consumers
in all economic brackets living paycheck to paycheck, and the
impact on their ability to access credit and other expense
management tools.
Key takeaway: Living paycheck to paycheck has become
the dominant way people manage their cashflow in the United States, with close to two-thirds of
the U.S. population, 64% or about 166 million adults, doing so in
March 2022.
Living paycheck to paycheck means devoting all of one's salary
to expenses with little to nothing left over at the end of the
month, yet many of these consumers remain credit worthy, actively
managing their cash flows in real time. In fact, close to
one-quarter of consumers living paycheck to paycheck report a
credit score higher than the FICO average of 750.
"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."
A Deeper Look at Credit
Scores
PYMNTS' research finds that
paycheck-to-paycheck consumers without issues paying their bills
have an about average credit score of 694, while those struggling
to pay bills each month have a below average credit score of 613.
The average credit score for all paycheck-to-paycheck consumers is
664, more than 90 points below the average for consumers not living
paycheck to paycheck. Meanwhile, the gap between the average credit
scores of low- and high-income consumers is less than 90 points.
Consumers who earn less than $50,000
report a below average credit score of 648, while those earning
more than $100,000 report an above
average credit score of 734.
The data also finds that consumers who are financially
struggling tend to check their credit scores more frequently. Of
those consumers who live paycheck to paycheck with issues paying
their bills, 20% checked their credit scores in the 24 hours before
PYMNTS' survey compared to only 9% of consumers who live paycheck
to paycheck without issues paying their bills.
Credit And Living Paycheck to Paycheck
The report
continues to find that credit card ownership remains high, with 63%
of respondents of all financial lifestyles saying they have made a
credit card payment in the last 90 days.
Paycheck-to-paycheck consumers are three times as likely to
revolve credit card debt and carry higher monthly balances overall.
Those consumers who never pay their credit balances in full also
tend to hold more credit cards than average. PYMNTS' research finds
that 29% of credit card holders "always" or "usually" revolve their
balances.
On average, credit card holders have approximately two credit
cards, which rises to three credit cards among those not likely to
pay their credit card in full (i.e., those who "always" or
"usually" have a revolving balance). Moreover, the data finds that
the average sum of monthly balances over the last six months for
those who always revolve balances on their credit cards is triple
the average of those who always pay in full.
Struggling consumers also tend to nearly saturate the average
credit card spending limit of $4,700,
declaring an average balance of $3,800. Paycheck-to-paycheck consumers not
struggling to pay their bills report an average spending of
$3,100 and a limit of $6,500. Consumers not living paycheck to paycheck
report an average spending of $2,100
and a $9,000 limit.Many
paycheck-to-paycheck consumers remain creditworthy, maintain good
credit scores, and are apt to tap into consumer loans, credit cards
and other payment options such as personal loans to manage their
cash flows.
"As the Fed looks to curb inflation by raising interest rates,
consider looking at any credit you have with a variable interest
rate," continued Nayar. "Many of LendingClub's 4 million members
have already refinanced their variable interest rate credit card
balance into a lower cost fixed rate loan so they can responsibly
manage their debt obligations."
To view the full report, visit:
http://www.pymnts.com/study/reality-check-paycheck-to-paycheck-credit-scores-consumer-card-debt-inflation/
Methodology
New Reality Check: The
Paycheck-To-Paycheck Report is based on a census-balanced survey of
2,326 U.S. consumers conducted from March 9
to March 11. The Paycheck-To-Paycheck series expands on
existing data published by state agencies such as the Federal
Reserve System and the Bureau of Labor Statistics to provide a deep
look into the elements that lie at the backbone of the American
consumer's 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: 52% of respondents
identified as females, 32% were college-educated and 36% declared
incomes of over $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 $70 billion in
loans, our artificial intelligence-driven 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 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
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SOURCE LendingClub Corporation