40% of Paycheck-to-Paycheck Consumers Report
Super-Prime Credit Scores
43% of All Cardholders Have Had a Revolving
Balance on Their Credit Cards in 2023, An Increase From 41% in
2022
SAN
FRANCISCO, Dec. 18, 2023 /PRNewswire/ -- LendingClub
Corporation (NYSE: LC), the parent company of LendingClub Bank,
America's leading digital marketplace bank, today released key
findings from the 29th edition of the Reality Check:
Paycheck-To-Paycheck research series, conducted in partnership with
PYMNTS Intelligence. The Credit Card Use Deep Dive Edition examines
the financial lifestyles of U.S. consumers and explores how they
use credit cards to manage their cash flows to get by. This edition
draws on insights from a survey of 3,252 U.S. consumers
conducted from Nov. 6 to Nov. 22 and
an analysis of other economic data.
The Paycheck-to-Paycheck Landscape
As of November 2023, 62% of consumers
lived paycheck to paycheck, mirroring last year's statistics and
slightly higher than last month. For those Americans, this means
that they need their next paycheck to cover their monthly financial
outflows. Among income brackets, 77% of consumers earning less
than $50,000 annually lived paycheck
to paycheck as of November 2023, as
did 67% of those earning between $50,000 and $100,000 and 45% of consumers earning more than
$100,000. These shares have also
remained stable since last year, indicating that U.S. consumers, in
the face of ongoing inflation, have adjusted their spending where
they can and still see their financial obligations outpace their
incomes.
Credit Card Ownership
Consumers living paycheck to paycheck own nearly 60% of the credit
cards in the U.S. Moreover 80% of paycheck-to-paycheck consumers
own at least one credit card, and two credit cards on average.
Overall, 54% of all consumers surveyed report having super-prime
credit scores, with 77% of those not living paycheck to paycheck
saying they have these high scores. That said, paycheck-to-paycheck
living does not preclude consumers from these high scores,
with 40% of these consumers report having super-prime credit
scores. The data also shows that paycheck-to-paycheck consumers are
more likely to use debit cards than credit cards for everyday
transactions, indicating that though these consumers have access to
credit, they aim to live within their means and preserve that
flexibility to remain creditworthy.
Regardless of financial lifestyle, the majority of consumers
(80%) consider their credit scores very or extremely important,
with the average consumer checking their credit scores every 76
days.
Financial Distress and Credit Behavior
The report establishes a connection between financial distress and
credit behavior, revealing that financial strain is linked to a
higher frequency of reaching one's credit limits and a higher
tendency of revolving one's credit card balances. The research also
confirms that those living paycheck to paycheck are more likely to
struggle with higher credit balances and to pay bills. Cardholders
revolve their credit card balance when they carry an unpaid portion
over to the following month. Data shows that
paycheck-to-paycheck cardholders are more than twice as likely as
those not living paycheck to paycheck to have revolved their credit
card balances at least occasionally in the last year. Among
all consumers, revolving has increased relative to 2022, with 43%
of cardholders doing so at least occasionally in 2023 (up from 41%
in 2022), highlighting a concerning shift over the past year.
Close to one-third of consumers say they have reached their
credit card limit, an average of $9,200, at least occasionally in the last year.
However, that amount more than doubles to 64% for those having a
hard time paying bills. Credit limits average $11,500 among those not living paycheck to
paycheck, with only 10% reaching their limit in the last 12
months.
Financial distress is also linked to a greater use of
installment or split payment plans. One-quarter of cardholders
overall have repayments pending as a part of an installment plan.
The likelihood of a cardholder having pending repayments from an
installment plan rises sharply among those who live paycheck to
paycheck.
Financing Features Are Essential for Paycheck-to-Paycheck
Consumers
Paycheck-to-paycheck consumers choose credit cards for their
financing features, while those not living paycheck to paycheck
value them more for their security and rewards options.
Consumers report that protection against theft and
fraud is the top factor they consider when choosing a
new card. Data shows that 85% of consumers not living paycheck to
paycheck and 77% of those living paycheck to paycheck without
issues paying bills report transaction safety as very or extremely
important when choosing a credit card. Cardholders not living
paycheck-to-paycheck are the most likely to say a rewards program
is an important criterion in their choice of credit card, at 77%.
In contrast, only 55% of paycheck-to-paycheck consumers struggling
to pay their bills cite rewards as an incentive. Instead,
struggling consumers are more likely to cite interest rates, at
78%, and credit limits, at 73%, as very or extremely important when
choosing a primary credit card.
"Credit cards can be an important financing option that
credit-savvy consumers use to better manage their cash flows,
though it's concerning that many consumers revolved their credit
card balances regardless of financial lifestyle," said Alia Dudum, LendingClub's Money Expert. "Credit
cards keep many in debt, and cardholders who carry a balance
(revolvers) subsidize the rewards earned by those who pay their
balance in full every month (transactors). Revolvers need better
solutions for retiring existing debt and better options for
bridging gaps in cash flow. There is a real opportunity for
financial companies like LendingClub to rebalance the playing
field and design products that benefit revolvers by
liberating them from the constraints of their existing
debt."
To view the full report, visit:
https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-revolving-debt-financing-credit-scores/
Methodology
New Reality Check: The
Paycheck-to-Paycheck Report — The Credit Card Use Deep Dive
Edition, a PYMNTS Intelligence and LendingClub collaboration, draws
on insights from a survey of 3,252 U.S. consumers conducted from
Nov. 6 to Nov. 22 and an 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 series expands on existing data published by
government agencies, such as the Federal Reserve 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, 33% were college-educated and 38%
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
$90 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
View original content to download
multimedia:https://www.prnewswire.com/news-releases/nearly-60-of-credit-cardholders-in-the-us-live-paycheck-to-paycheck-302017514.html
SOURCE LendingClub Corporation