Consumers Earning $100,000+ and Those Living
in the West Saw the Highest Percentage Growth From a Year
Ago
SAN
FRANCISCO, May 24, 2023 /PRNewswire/
-- LendingClub Corporation (NYSE: LC), the parent company of
LendingClub Bank, America's leading digital marketplace bank, today
released findings from the 22nd edition of the New
Reality Check: The Paycheck-to-Paycheck research series, conducted
in partnership with PYMNTS. The Regional Divide Edition examines
why U.S. consumers in urban, suburban and rural areas across the
U.S. are living paycheck to paycheck and identifies the financial
stressors they face. This edition is based on a census-balanced
survey of 3,652 U.S. consumers conducted from April 3 to April 17 as well as analysis of other
economic data.
Key takeaway: Consumers are facing financial challenges
based on their location that lead them to live paycheck to
paycheck, with urban dwellers and those earning the highest
salaries more apt to feel the pain of inflationary pressures and
the rising cost of living.
Today's Paycheck-to-Paycheck Landscape
Sixty-one percent of consumers overall were living paycheck to
paycheck in April 2023, a level
similar to April 2022. In fact, since
March 2020, an average of 60% of
consumers have reported living this way. For those Americans, this
means that they need their next paycheck to cover their monthly
financial outflows.
The share of high-income consumers in the U.S. earning over
$100,000 per year who live paycheck
to paycheck increased seven percentage points to 49% in
April 2023 from 42% in April 2022. Conversely, the share of lower income
consumers — those earning less than $50,000 — who live paycheck to paycheck dropped
seven percentage points from 80% to 73% in the same period, and the
portion of those earning between $50,000 and $100,000 remained roughly flat at 63%.
"While income is obviously a major factor, where you live
appears to be almost equally important in factoring whether a
consumer is living paycheck to paycheck," said Anuj Nayar, Financial Health Officer at
LendingClub. "These findings echo a March
2023 Smart Asset report that indicated what a
$100,000 salary is actually worth in
the top U.S. cities. Seven out of the 10 cheapest cities — where
$100,000 went the furthest — were in
Texas, while six of the most
expensive cities were in California and on the west coast."
Americans Living Paycheck to Paycheck by Region
Sixty-nine percent of consumers in urban areas live paycheck to
paycheck, which is 25% more than their suburban counterparts, 55%
of whom live paycheck to paycheck. Additionally, 63% of rural
consumers reported living paycheck to paycheck. These regional
concentrations of paycheck-to-paycheck consumers could be
attributed to the high percentage of millennials living in urban
areas (48%) as well as the large share of baby boomers and seniors
— many of whom are retired and living on a fixed income — living in
rural areas (32%). Additionally, the share of consumers living
paycheck to paycheck is generally even across regions, although the
West saw the steepest increase year over year, rising from 59% in
April 2022 to 64% in April 2023. This indicates that the rising cost
of living has impacted consumers in the West the most.
U.S. Consumer Sentiments by Location
The prevalence of financial distress among urban dwellers is
consistent across all regions except for the South (Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North
Carolina, Oklahoma,
South Carolina, Tennessee, Texas, Virginia, Washington
D.C. and West Virginia).
For example, urban residents across all regions cite insufficient
income as the main reason they live paycheck to paycheck.
Furthermore, in households of two or more, 82% of urban dwellers
report that they are responsible for more than half of their
household income, yet urban consumers are the least likely to cite
a significant debt burden as the top reason for financial distress.
Urban consumers in the Northeast (Connecticut, Maine, Massachusetts, New
Hampshire, New Jersey,
New York, Pennsylvania and Vermont) are more likely to cite paying for
costs of other family members and unnecessary spend as the reasons
they live paycheck to paycheck.
Eighty-three percent of urban consumers in all regions have made
at least one payment related to a credit product in the last 90
days, with urban dwellers in the Northeast (88%) and the West (87%)
the most likely to pay for a credit product. Usage of almost all
credit products is higher among urban consumers. One exception,
unsurprisingly, is auto loans, where suburban and rural consumers
take the lead. However, urban consumers are less likely to cite
debt as a reason for living paycheck to paycheck. The report finds
that 82% of urban consumers have outstanding credit card balances
averaging 57% of their available savings, and more than half of
these consumers — 44% of the urban sample — have installment plan
repayments as part of their outstanding balance. In contrast, 70%
of rural consumers have an outstanding balance averaging 43% of
their available savings, yet only 15% report having installment
plan payments as part of their outstanding balance.
"It's not a surprise that urban residents are less likely to
cite debt as a reason for living paycheck to paycheck because many
of them are repaying their credit card balances through installment
payments so they can find relief," continued Nayar. "As interest
rates continue to climb and outstanding credit card balances reach
all-time highs, now is the time to consider consolidating or
refinancing high-interest debt to lower cost alternatives. This
approach to debt management has helped many Americans control their
cashflow as they adapt to inflationary pressures and plan for the
future."
To view the full report, visit:
https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-regional-differences-housing-financial-challenges/
Methodology
New Reality Check: The Paycheck-to-Paycheck Report — The
Regional Divide Edition is based on a census-balanced survey of
3,652 U.S. consumers conducted from April 3
to April 17 as well as analysis of other economic data. The
data in this report is not intended to be a representation of
LendingClub's core member base. The Paycheck- to-Paycheck Report
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. The survey sample for this report was balanced to
match the U.S. adult population in a set of key demographic
variables: 51% of respondents identified as female, 32% were
college-educated and 37% 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
$85 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 4.7 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