Credit Card Debt Replaces Inflation as Top Financial Concern for Consumers

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57% of consumers rely on credit cards to make ends meet.

While inflation and higher prices remain a lingering challenge for consumers as they strive to make ends meet and pay their bills on time, other financial challenges are becoming a more pressing concern, according to Achieve, the leader in digital personal finance.

Achieve’s think tank, the Achieve Center for Consumer Insights, surveyed 2,000 consumers with active accounts across consumer debt categories, including credit cards, mortgages and home equity lines of credit, and auto and student loans.

The survey format and respondent panel are designed to complement the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit by providing qualitative insights into consumer borrowing trends.

To further examine the ramifications of rising loan delinquencies, the survey panel included a subset of borrowers who were 30 days or more past due on their payments at least once during the past six months.

Inflation’s impact lessens

Job loss or reduced income was the leading reason consumers said they have recently fallen behind on their bills, with 18% of respondents citing this as the primary reason they missed a payment on a debt account.

The share of consumers who cited inflation as the primary reason they missed a payment on one of their debt accounts fell by more than half in the third quarter, to 10%, compared to 21% during the second quarter.

While the share of consumers who said they missed a debt payment because they didn’t want to pay the bill remains low, the percentage who cited this as their primary reason grew across all debt accounts and among credit card, auto and student loan borrowers.

Recent positive news about the pace of inflation slowing, and in some cases, even reversing course, appears to be overshadowed by other financial concerns for struggling consumers. As a sign of the beginning of a choppy job market, more and more consumers are impacted by reduced income or job loss. Combined with interest rates still near decades-long highs, consumers with significant debt levels find it difficult to make ends meet. - Achieve Co-Founder Andrew Housser

57% of consumers rely on credit cards to get by

Over half (57%) of Achieve’s survey respondents said they carry a credit card balance to cover the cost of essential expenses, including 27% who said spending on living expenses has accrued on their credit card balances for more than six months.

During the third quarter, 36% of consumers said paying their recurring debts on time was difficult, a slight increase from 31% in the second quarter. Among these respondents, 64% said paying their debts on time is challenging because they don’t make enough money to cover their spending.

Almost a third (32%) said having too many accounts to repay contributes to their debt challenges. The share of respondents, 27%, said timing cashflow between receiving income and payment due dates remained constant over several months. Meanwhile, 16% said they have difficulty tracking how much they owe across their accounts.

Households relying heavily on credit cards to pay for necessities often get caught up in a cycle of indebtedness they cannot escape. - Achieve Co-Founder Andrew Housser

Economic optimism is growing

Consumer sentiment about how their financial situation has evolved over the past three years is mixed, with a nearly even share of respondents saying their situation has improved (37%) and worsened (36%).

Expectations for the future are much more robust, with most consumers expecting their financial circumstances to improve in the short and long term. Over the next year, 56% of consumers expect their finances will improve, with that rate growing to 64% when asked about their outlook three years from now.

In Nevada

In August, Joint Economic Committee Republicans placed Nevada’s inflation at 15.6% since President Biden assumed office.

For comparison, the Bureau of Labor Statistics reported that inflation fluctuated in a West region, which includes Nevada, between 7% and 9% throughout 2022 compared to 2021.

BLS calculates inflation as a percentage change from 12 months prior, while JEC uses January 2021 as its baseline. Furthermore, BLS uses regional data while JEC supplements it with state-level data.

The nation’s inflation rate peaked in June 2022 at 9.1%, the highest annual increase since 1981.

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Douglas Pilarski is an award-winning writer & journalist based on the West Coast. He writes about luxury goods, exotic cars, horology, tech, food, lifestyle, equestrian & rodeo, and millionaire travel.

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