With the holiday shopping season in full swing, families are feeling less of a stretch in their budgets than ever before.
As of October, 60% of Americans were living paycheck to paycheck, according to the latest data LendingClub report. A year ago, the number of adults who felt too thin was closer to 56%.
“More and more consumers who have historically managed their budgets comfortably are feeling financial stress, which will affect their spending behavior during the holiday shopping season,” said Anuj Nayar, LendingClub CFO.
Not only daily expenses have increased, but also inflation real wages will decline.
Real average hourly earnings fell 3% from last year, according to the latest data from the US Bureau of Labor Statistics.
A separate report by Salary Finance found that two-thirds of working adults said they were materially worse than they were a year ago.
already credit card balances are growingup 15% in the last quarter, its biggest annual jump in more than 20 years.
About half of the buyers said they would buy less stuff because of higher prices, and more than one-third said they would rely on coupons or other money-saving strategies, according to a separate survey conducted by RetailMeNot.
More consumers are also planning finance your purchases this year with credit cards and buy now, pay off loans later.
And 25% of shoppers said they would choose cheaper versions or more practical gifts like gas cards, according to another TransUnion holiday survey.
“People try to save and use what they have,” he said Cecilia Zaiden, Vice President of Retail Business, TransUnion.
Shoppers at the King of Prussia Mall in King of Prussia, Pennsylvania, on Saturday, Dec. 4, 2021.
Hannah Beyer | Bloomberg | Getty Images
Holiday expenses can come in a high cost if that means running up additional credit card debt The Federal Reserve raises interest rates to slow inflationaccording to Ted Rossman, senior industry analyst at CreditCards.com.
“Credit card debt is easy to get into and hard to get out of,” he said. “High inflation and rising interest rates make release even more difficult.”
Credit card rates now average 19%, an all-time high – and those rates will continue to rise as the central bank has indicated even bigger increases are coming until inflation shows clear signs of rebounding.
“This makes it more likely that credit card companies will raise their interest rates and the money you owe will become more expensive over time,” added Natalia Brown, director of client operations for National Debt Relief.
Rising inflation and interest rates mean consumers need to be extra careful, she said.