![\"\"](\"https://www.pymnts.com/wp-content/uploads/2025/03/Screenshot-173.png\")
It takes a lot to get most people to agree on anything.
\nEven members of the same family have a hard time deciding what movie to watch on a Friday night, what to name the new puppy or what color to paint the living room. Getting consensus across an organization to move a new project forward can become painstakingly arduous \u2014 that\u2019s quite often why inertia reigns supreme.
\nThere is one thing that nearly everyone agrees on. And that is the importance of protecting their financial interests.
\nFinancial stability represents a fundamental human need. Whether wealthy with diversified investment portfolios or living paycheck to paycheck with financial pressures, individuals understand that safeguarding their money directly impacts their quality of life, future opportunities and sense of security. That\u2019s as true for Gen Zs living their best-connected lives at home and at work as it is for Grandma collecting Social Security and dividends still trying to figure out how to Venmo birthday money to her grandkids.
\n| Financial stability is a complex calculation that goes beyond dollars and cents. \n | \n
Financial stability is also a complex calculation that goes beyond dollars and cents sitting in a bank or investment account. It\u2019s about how wealthy people feel when they look at the value of their home, how well their investments are doing and how secure they feel in their jobs. It\u2019s why preserving and growing one\u2019s economic resources remains a common priority, and source of anxiety in uncertain times \u2014 regardless of how many zeros and decimal points one\u2019s bank account balances may have.
\nThat\u2019s why financial decisions often come down to the quantitative and qualitative inputs that determine how wealthy any one individual, or household, may feel at any given point in time. Taking into account their income today, their wealth and their well-being in the years to come.
\nBased on brand-new, unpublished data from PYMNTS Intelligence, the financial confidence of Americans has been shaken severely. And their spending plans, present and future, are starting to show it.
\nA new report to be released by PYMNTS Intelligence next week finds that the vast majority of consumers, whether they are living paycheck to paycheck or not, are pulling back their spending. They are doing that by buying fewer things or buying cheaper products.
\nThis national study of 2,820 consumers (conducted March 12-31, before the world-shaking announcements of April 2) found Americans already making the connection between tariffs and the economic pain of persistent inflation and a possible recession, even before the full impact of these policies has hit home \u2014 and their wallets.
\n\n\nAnd they\u2019re not waiting around to change their buying and spending patterns.
\nNearly 78 percent of both groups across all major retail categories of spend \u2014 clothes, food, health and beauty, personal services, household and tech/digital services \u2014 are rethinking what they buy and how much they are willing to spend when they do. Tech purchases, eating out and buying coffee at the local coffee shop are consistently on the chopping block, even for those who do not feel financial pressures.
\nThose living paycheck to paycheck are concerned because higher prices crimp how far their paychecks can or will go. Those not living paycheck to paycheck are pulling back because they want to keep their powder dry, just in case.
\n\n\nBoth groups were also probably feeling less wealthy than they did at the start of the year when the stock market took off and so did their 401(k)s. Even before the market meltdown of last week, the month of March 2025 saw the Dow down 4.2% and the S&P down 5.8%, with the market posting its worst month since March of 2022.
\nYet even with this pullback, consumers weren\u2019t cutting everything. Some spending is sacred. Kids\u2019 activities top this list \u2014 parents will keep paying for soccer equipment, piano lessons and math tutoring even while cutting their own spending. Personal care services that most of us can\u2019t DIY (or shouldn\u2019t attempt) like haircuts and professional beauty services also seem resilient. These patterns show that when consumers tighten their belts, they\u2019re making emotional choices, not just financial ones.
\nKeep in mind: these pullbacks were all before Liberation Day, which brought tariffs that were more extensive than widely predicted, and before the ensuing stock market crash.
\n| Consumers are better economic forecasters than even some of the fanciest economic models. \n | \n
After years studying consumer behavior (especially during COVID), we\u2019ve found consumers are better economic forecasters than even some of the fanciest economic models. During the pandemic, consumer predictions of the durations of the crisis were better than the medical experts. Their spending patterns told the real story all along.
\nSo, if consumers do what they say will do \u2014 and have already started to do \u2014 with their spending, the simple back-of-the-envelope math predicts a potentially gloomy outcome for the U.S. economy. That\u2019s why many market and economic experts predict slowing economic and anemic GDP growth.
\nAccording to Census, U.S. retail spend was roughly $7.4 trillion over the last year, 80% of which can be attributed to consumers. The PYMNTS Intelligence data finds that 78% percent of consumers say they will cut back (buy less or buy cheaper), given the expected economic situation. Even a decrease of 2% in overall spending across that group would amount to a loss of $92 billion every year to the U.S. economy.
\nIf prices increase by 10%, the PYMNTS Intelligence study finds that 18% of consumers say they will simply stop buying those items.
\n\n\nThese data were collected before Liberation Day. And assumes that those consumers are still employed with wages that keep pace with inflation. There\u2019s no guarantee of either because companies could cut jobs as demand for their products and services soften, and wages might not keep up with inflation as the job market softens.
\nA consumer pullback is just one chapter of a very complex global economic story.
\nAccording to a forthcoming PYMNTS Intelligence March 2025 Certainty Project Study, 25% of middle market businesses report facing high levels of uncertainty, with a staggering cost equivalent to 6% of their annual revenues.
\nThe ripple effects are tangible: 32% of these businesses say they have or will miss business opportunities due to that uncertainty, 33% faced delays in getting products to market, and 31% experienced client turnover because of their own uncertain business outlooks.
\nLet that sink in.
\nThat\u2019s roughly a third of U.S. businesses making between $100M to $1B in annual revenue \u2014 and the integral bridge between the enterprise and smaller business supply chains \u2014 who face some sort of economic uncertainty.
\n| These businesses are doing the best they can to make lemonade out of tariff lemons. \n | \n
This same study also suggests that those supply chains \u2014 having just recovered from pandemic-era disruptions \u2014 are likely to face new chaos as businesses absorb the reality of tariffs actually taking effect on every import into the U.S. and higher tariffs on goods imported by 60 important trading partners.
\nAmong middle-market businesses in the consumer and industrial goods industries, an overwhelming 89% expect shortages, delays and higher costs for materials. These businesses are doing the best they can to make lemonade out of tariff lemons, with 26% stockpiling inventory and negotiating with suppliers for better prices before the full effects take hold.
\nThis is coming at the same time as these businesses face growing uncertainties about their own sales and margins, making them ill-positioned to absorb much of those higher costs as Administration officials hypothesize.
\nAccording to PYMNTS Intelligence research, the tariff policies that middle market businesses were expecting in March created a further crisis of confidence. Six in 10 expected higher uncertainty and planning challenges as a direct result, while 70% anticipated difficulty exporting due to retaliatory tariffs from trading partners. Overall, 38% of middle-market businesses expected negative impacts from tariffs \u2014 a figure that jumps to 53% among those in goods industries, up dramatically from 35% just a month earlier in February.
\nAnd this was all before the Trump Administration announced tariffs that were higher, covering more countries and possibly more permanent than were widely expected on Liberation Day.
\nJust north of Boston lies Laconia, New Hampshire. Laconia is famous for two things. It is right smack in the center of New Hampshire\u2019s Lakes Region,\u00a0with all four lakes touching some part of its city limits. And it is home to Funspot, the largest Arcade Center in the world, crowned the world\u2019s largest arcade in the 2008 Guinness Book of World Records.
\nFunspot was established in 1952, and is home to more than 600 arcade games, many from the heyday of pinball machines and arcade games, its owners claim. The arcade industry, globally, is set to reach $21 billion by 2030, despite (and many say in spite of) the shift to video games. After all, who doesn\u2019t love a game of good old-fashioned arcade pinball?
\nPinball combines skill and chance. One powerful flip sends a metal ball careening across a field of flashing lights, blaring music and unexpected drops. Players work the flippers to keep the ball in play, building momentum and points until the game ends. No two games \u2014 or players \u2014 are alike.
\nEdward Lorenz was an American mathematician and meteorologist and considered the founder of modern chaos theory. His work at MIT was pathbreaking in furthering the world\u2019s collective understanding of complex systems. Those insights have been applied to fields as diverse as weather, biology, computer science and economics.
\n| Economists build models to analyze tariffs\u2019 impacts, but struggle with the same challenge that makes predicting a pinball\u2019s path impossible: compounding and interdependent interactions that magnify even the smallest of initial variations. \n | \n
In his 1993 book The Essence of Chaos, Lorenz uses pinball to illustrate complex systems. He notes that tiny differences in how players launch the ball create completely different outcomes. Though the physics of the game are deterministic, the results seem random due to the presence of these small sensitivities.
\nBoth pinball and economics follow set rules yet defy precise prediction. In the example of tariffs, economists build models to analyze their impacts, but struggle with the same challenge that makes predicting a pinball\u2019s path impossible: compounding and interdependent interactions that magnify even the smallest of initial variations.
\nA pinball bounces off bumpers and obstacles, each collision altering its path and influencing all future movements. Similarly, tariffs trigger responses throughout the economy \u2014 consumers change habits, companies shift supply chains, trading partners retaliate \u2014 creating feedback loops that standard economic models can\u2019t capture or anticipate.
\nThis is especially true in real time today, given the uncertainty of how the tariff game is going to play out. Tariffs could be gone by Easter or here through the century \u2014 or anything in between.
\nToday\u2019s consumers, already nervous about spending, are the first bumper in our economic pinball machine. Their pullback creates the initial ricochet that determines how badly tariffs hurt the broader economy.
\nOur research consistently shows that consumers predict economic trends better than the experts. When they sense trouble \u2014 as they clearly do now with tariffs \u2014 their changes in behavior become self-fulfilling prophecies. Less spending leads to inventory pileups, less demand, then production slowdowns, then job cuts, then even less consumer spending \u2026 and down we go.
\nThe lesson from pinball is clear: in complex systems, you can\u2019t control every bounce once the ball is in play. Tariffs might seem straightforward, but the economic game that follows almost defies prediction. It involves the interaction between dozens of countries, millions of businesses and billions of consumers globally \u2014 and their guesses as to what everyone else is going to do.
\n| The lesson from pinball is clear: in complex systems, you can\u2019t control every bounce once the ball is in play. \n | \n
Consumer spending drives nearly 70% of our economy,\u00a0making it the most powerful bumper in this economic pinball game. When consumers collectively flinch \u2014 as our data shows they already are \u2014 the economic ball can careen in wild and dangerous directions.
\nThe $92 billion consumer pullback we\u2019ve calculated, based on the March expectations, is just the first bounce. But if the current tariff situation proceeds as outlined, the direct and indirect effects have the potential to impact every single person and every single business in the world.
\nAnd unlike arcade pinball, this economic game affects real families, real jobs and real communities. The stakes couldn\u2019t be higher.
\nYet even as economic headwinds gather, there are compelling reasons for optimism \u2014 or at least not descent into deep pessimism. Throughout our nation\u2019s history, periods of economic challenge have consistently sparked innovation, adaptation and renewal. Let\u2019s hope there is the collective will to course correct and play through the storm.
\n\n
The post What Pinball Tells Us About Spending in the Post-Tariff World appeared first on PYMNTS.com.
\n", "content_text": "It takes a lot to get most people to agree on anything.\nEven members of the same family have a hard time deciding what movie to watch on a Friday night, what to name the new puppy or what color to paint the living room. Getting consensus across an organization to move a new project forward can become painstakingly arduous \u2014 that\u2019s quite often why inertia reigns supreme.\nThere is one thing that nearly everyone agrees on. And that is the importance of protecting their financial interests.\nFinancial stability represents a fundamental human need. Whether wealthy with diversified investment portfolios or living paycheck to paycheck with financial pressures, individuals understand that safeguarding their money directly impacts their quality of life, future opportunities and sense of security. That\u2019s as true for Gen Zs living their best-connected lives at home and at work as it is for Grandma collecting Social Security and dividends still trying to figure out how to Venmo birthday money to her grandkids.\n\n\n\n Financial stability is a complex calculation that goes beyond dollars and cents.\n\n\n\n\nFinancial stability is also a complex calculation that goes beyond dollars and cents sitting in a bank or investment account. It\u2019s about how wealthy people feel when they look at the value of their home, how well their investments are doing and how secure they feel in their jobs. It\u2019s why preserving and growing one\u2019s economic resources remains a common priority, and source of anxiety in uncertain times \u2014 regardless of how many zeros and decimal points one\u2019s bank account balances may have.\nThat\u2019s why financial decisions often come down to the quantitative and qualitative inputs that determine how wealthy any one individual, or household, may feel at any given point in time. Taking into account their income today, their wealth and their well-being in the years to come.\nBased on brand-new, unpublished data from PYMNTS Intelligence, the financial confidence of Americans has been shaken severely. And their spending plans, present and future, are starting to show it.\nThe Not-So-Wealthy Effect\nA new report to be released by PYMNTS Intelligence next week finds that the vast majority of consumers, whether they are living paycheck to paycheck or not, are pulling back their spending. They are doing that by buying fewer things or buying cheaper products.\nThis national study of 2,820 consumers (conducted March 12-31, before the world-shaking announcements of April 2) found Americans already making the connection between tariffs and the economic pain of persistent inflation and a possible recession, even before the full impact of these policies has hit home \u2014 and their wallets.\n\n\nAnd they\u2019re not waiting around to change their buying and spending patterns.\nNearly 78 percent of both groups across all major retail categories of spend \u2014 clothes, food, health and beauty, personal services, household and tech/digital services \u2014 are rethinking what they buy and how much they are willing to spend when they do. Tech purchases, eating out and buying coffee at the local coffee shop are consistently on the chopping block, even for those who do not feel financial pressures.\nThose living paycheck to paycheck are concerned because higher prices crimp how far their paychecks can or will go. Those not living paycheck to paycheck are pulling back because they want to keep their powder dry, just in case.\n\n\nBoth groups were also probably feeling less wealthy than they did at the start of the year when the stock market took off and so did their 401(k)s. Even before the market meltdown of last week, the month of March 2025 saw the Dow down 4.2% and the S&P down 5.8%, with the market posting its worst month since March of 2022.\nYet even with this pullback, consumers weren\u2019t cutting everything. Some spending is sacred. Kids\u2019 activities top this list \u2014 parents will keep paying for soccer equipment, piano lessons and math tutoring even while cutting their own spending. Personal care services that most of us can\u2019t DIY (or shouldn\u2019t attempt) like haircuts and professional beauty services also seem resilient. These patterns show that when consumers tighten their belts, they\u2019re making emotional choices, not just financial ones.\nKeep in mind: these pullbacks were all before Liberation Day, which brought tariffs that were more extensive than widely predicted, and before the ensuing stock market crash.\n\n\n\n Consumers are better economic forecasters than even some of the fanciest economic models.\n\n\n\n\nAfter years studying consumer behavior (especially during COVID), we\u2019ve found consumers are better economic forecasters than even some of the fanciest economic models. During the pandemic, consumer predictions of the durations of the crisis were better than the medical experts. Their spending patterns told the real story all along.\nSo, if consumers do what they say will do \u2014 and have already started to do \u2014 with their spending, the simple back-of-the-envelope math predicts a potentially gloomy outcome for the U.S. economy. That\u2019s why many market and economic experts predict slowing economic and anemic GDP growth.\nAccording to Census, U.S. retail spend was roughly $7.4 trillion over the last year, 80% of which can be attributed to consumers. The PYMNTS Intelligence data finds that 78% percent of consumers say they will cut back (buy less or buy cheaper), given the expected economic situation. Even a decrease of 2% in overall spending across that group would amount to a loss of $92 billion every year to the U.S. economy.\nIf prices increase by 10%, the PYMNTS Intelligence study finds that 18% of consumers say they will simply stop buying those items.\n\n\nThese data were collected before Liberation Day. And assumes that those consumers are still employed with wages that keep pace with inflation. There\u2019s no guarantee of either because companies could cut jobs as demand for their products and services soften, and wages might not keep up with inflation as the job market softens.\nThe Business Uncertainty Multiplier\nA consumer pullback is just one chapter of a very complex global economic story.\nAccording to a forthcoming PYMNTS Intelligence March 2025 Certainty Project Study, 25% of middle market businesses report facing high levels of uncertainty, with a staggering cost equivalent to 6% of their annual revenues.\nThe ripple effects are tangible: 32% of these businesses say they have or will miss business opportunities due to that uncertainty, 33% faced delays in getting products to market, and 31% experienced client turnover because of their own uncertain business outlooks.\nLet that sink in.\nThat\u2019s roughly a third of U.S. businesses making between $100M to $1B in annual revenue \u2014 and the integral bridge between the enterprise and smaller business supply chains \u2014 who face some sort of economic uncertainty.\n\n\n\n These businesses are doing the best they can to make lemonade out of tariff lemons.\n\n\n\n\nThis same study also suggests that those supply chains \u2014 having just recovered from pandemic-era disruptions \u2014 are likely to face new chaos as businesses absorb the reality of tariffs actually taking effect on every import into the U.S. and higher tariffs on goods imported by 60 important trading partners.\nAmong middle-market businesses in the consumer and industrial goods industries, an overwhelming 89% expect shortages, delays and higher costs for materials. These businesses are doing the best they can to make lemonade out of tariff lemons, with 26% stockpiling inventory and negotiating with suppliers for better prices before the full effects take hold.\nThis is coming at the same time as these businesses face growing uncertainties about their own sales and margins, making them ill-positioned to absorb much of those higher costs as Administration officials hypothesize.\nAccording to PYMNTS Intelligence research, the tariff policies that middle market businesses were expecting in March created a further crisis of confidence. Six in 10 expected higher uncertainty and planning challenges as a direct result, while 70% anticipated difficulty exporting due to retaliatory tariffs from trading partners. Overall, 38% of middle-market businesses expected negative impacts from tariffs \u2014 a figure that jumps to 53% among those in goods industries, up dramatically from 35% just a month earlier in February.\nAnd this was all before the Trump Administration announced tariffs that were higher, covering more countries and possibly more permanent than were widely expected on Liberation Day.\nWhat We Can Learn From Pinball Machines \nJust north of Boston lies Laconia, New Hampshire. Laconia is famous for two things. It is right smack in the center of New Hampshire\u2019s Lakes Region,\u00a0with all four lakes touching some part of its city limits. And it is home to Funspot, the largest Arcade Center in the world, crowned the world\u2019s largest arcade in the 2008 Guinness Book of World Records.\nFunspot was established in 1952, and is home to more than 600 arcade games, many from the heyday of pinball machines and arcade games, its owners claim. The arcade industry, globally, is set to reach $21 billion by 2030, despite (and many say in spite of) the shift to video games. After all, who doesn\u2019t love a game of good old-fashioned arcade pinball?\nPinball combines skill and chance. One powerful flip sends a metal ball careening across a field of flashing lights, blaring music and unexpected drops. Players work the flippers to keep the ball in play, building momentum and points until the game ends. No two games \u2014 or players \u2014 are alike.\nEdward Lorenz was an American mathematician and meteorologist and considered the founder of modern chaos theory. His work at MIT was pathbreaking in furthering the world\u2019s collective understanding of complex systems. Those insights have been applied to fields as diverse as weather, biology, computer science and economics.\n\n\n\n Economists build models to analyze tariffs\u2019 impacts, but struggle with the same challenge that makes predicting a pinball\u2019s path impossible: compounding and interdependent interactions that magnify even the smallest of initial variations.\n\n\n\n\nIn his 1993 book The Essence of Chaos, Lorenz uses pinball to illustrate complex systems. He notes that tiny differences in how players launch the ball create completely different outcomes. Though the physics of the game are deterministic, the results seem random due to the presence of these small sensitivities.\nBoth pinball and economics follow set rules yet defy precise prediction. In the example of tariffs, economists build models to analyze their impacts, but struggle with the same challenge that makes predicting a pinball\u2019s path impossible: compounding and interdependent interactions that magnify even the smallest of initial variations.\nA pinball bounces off bumpers and obstacles, each collision altering its path and influencing all future movements. Similarly, tariffs trigger responses throughout the economy \u2014 consumers change habits, companies shift supply chains, trading partners retaliate \u2014 creating feedback loops that standard economic models can\u2019t capture or anticipate.\nThis is especially true in real time today, given the uncertainty of how the tariff game is going to play out. Tariffs could be gone by Easter or here through the century \u2014 or anything in between.\nNavigating the New Economic Chaos\nToday\u2019s consumers, already nervous about spending, are the first bumper in our economic pinball machine. Their pullback creates the initial ricochet that determines how badly tariffs hurt the broader economy.\nOur research consistently shows that consumers predict economic trends better than the experts. When they sense trouble \u2014 as they clearly do now with tariffs \u2014 their changes in behavior become self-fulfilling prophecies. Less spending leads to inventory pileups, less demand, then production slowdowns, then job cuts, then even less consumer spending \u2026 and down we go.\nThe lesson from pinball is clear: in complex systems, you can\u2019t control every bounce once the ball is in play. Tariffs might seem straightforward, but the economic game that follows almost defies prediction. It involves the interaction between dozens of countries, millions of businesses and billions of consumers globally \u2014 and their guesses as to what everyone else is going to do.\n\n\n\n The lesson from pinball is clear: in complex systems, you can\u2019t control every bounce once the ball is in play.\n\n\n\n\nConsumer spending drives nearly 70% of our economy,\u00a0making it the most powerful bumper in this economic pinball game. When consumers collectively flinch \u2014 as our data shows they already are \u2014 the economic ball can careen in wild and dangerous directions.\nThe $92 billion consumer pullback we\u2019ve calculated, based on the March expectations, is just the first bounce. But if the current tariff situation proceeds as outlined, the direct and indirect effects have the potential to impact every single person and every single business in the world.\nAnd unlike arcade pinball, this economic game affects real families, real jobs and real communities. The stakes couldn\u2019t be higher.\nYet even as economic headwinds gather, there are compelling reasons for optimism \u2014 or at least not descent into deep pessimism. Throughout our nation\u2019s history, periods of economic challenge have consistently sparked innovation, adaptation and renewal. Let\u2019s hope there is the collective will to course correct and play through the storm.\n \nThe post What Pinball Tells Us About Spending in the Post-Tariff World appeared first on PYMNTS.com.", "date_published": "2025-04-07T07:00:30-04:00", "date_modified": "2025-04-07T06:42:07-04:00", "authors": [ { "name": "Karen Webster", "url": "https://www.pymnts.com/author/karen-webster/", "avatar": "https://secure.gravatar.com/avatar/5b27788b9b2e77749b3dc9da766486d8?s=512&d=blank&r=g" } ], "author": { "name": "Karen Webster", "url": "https://www.pymnts.com/author/karen-webster/", "avatar": "https://secure.gravatar.com/avatar/5b27788b9b2e77749b3dc9da766486d8?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2025/04/karen.jpg", "tags": [ "Connected Economy", "Consumer Finance", "Consumer Spending", "economy", "Karen Webster", "KLW Commentary", "Main Feature", "News", "PYMNTS Intelligence", "PYMNTS News", "tariffs" ] }, { "id": "https://www.pymnts.com/?p=2520342", "url": "https://www.pymnts.com/consumer-finance/2025/consumers-turn-to-credit-for-cash-management-when-unplanned-expenses-hit-study-finds/", "title": "Consumers Turn to Credit for Cash Management When Unplanned Expenses Hit, Study Finds", "content_html": "Emergency or unplanned expenses happen to consumers all the time. Some are impulse \u201cwants,\u201d and others are emergency \u201cneeds.\u201d Either way, they can be expensive. In the last three months, more than one-third of shoppers spent at least $250 on an impulse purchase, with a median price tag of roughly $500. Typical emergency purchases cost even more.
\nNaturally, major unexpected expenses fall outside normal budgets, making it difficult for consumers to cover them. For impulse and emergency purchases alike, shoppers are more likely to pay with credit than cash. In fact, our latest research shows that access to credit heavily impacts a shopper\u2019s ability to manage unplanned expenses and remain financially flexible, especially in the face of emergencies.
\n\u201cManaging Unplanned Expenses: How The Pay Later Economy Fits Consumer Needs,\u201d a PYMNTS Intelligence and Splitit collaboration, examines consumer spending trends for impulse and emergency purchases, focusing on the use of credit. It draws on insights from a survey of 7,078 consumers conducted from Jan. 29 to Feb. 7.
\nUnplanned expenses happen all the time. Download \u201cManaging Unplanned Expenses: How The Pay Later Economy Fits Consumer Needs\u201d now to learn more about why access to credit shapes how shoppers make critical spending decisions when emergencies occur or when there\u2019s an impulse deal that\u2019s just too good to pass up.
\nThe post Consumers Turn to Credit for Cash Management When Unplanned Expenses Hit, Study Finds appeared first on PYMNTS.com.
\n", "content_text": "Emergency or unplanned expenses happen to consumers all the time. Some are impulse \u201cwants,\u201d and others are emergency \u201cneeds.\u201d Either way, they can be expensive. In the last three months, more than one-third of shoppers spent at least $250 on an impulse purchase, with a median price tag of roughly $500. Typical emergency purchases cost even more.\nNaturally, major unexpected expenses fall outside normal budgets, making it difficult for consumers to cover them. For impulse and emergency purchases alike, shoppers are more likely to pay with credit than cash. In fact, our latest research shows that access to credit heavily impacts a shopper\u2019s ability to manage unplanned expenses and remain financially flexible, especially in the face of emergencies.\n\u201cManaging Unplanned Expenses: How The Pay Later Economy Fits Consumer Needs,\u201d a PYMNTS Intelligence and Splitit collaboration, examines consumer spending trends for impulse and emergency purchases, focusing on the use of credit. It draws on insights from a survey of 7,078 consumers conducted from Jan. 29 to Feb. 7.\nInside \u201cManaging Unplanned Expenses: How The Pay Later Economy Fits Consumer Needs\u201d:\n\nThe median cost of unplanned expenditures in key categories such as auto parts, appliances and more\nThe shares of consumers who pay for impulse and emergency expenses with credit and cash\nWhat consumers prioritize in their choice of credit method\nThe shares of consumers who use buy now, pay later (BNPL) and other alternatives to credit cards\nWhich age groups are the biggest impulse spenders, and which have the most optimistic spending outlooks\n\n\n\n \n \n \n \n \n \n \n Download the Study\n \n Managing Unplanned Expenses: How The Pay Later Economy Fits Consumer Needs\n \n \n \n \n \n \n [contact-form-7]\n \n \n \n \n \n\nUnplanned expenses happen all the time. Download \u201cManaging Unplanned Expenses: How The Pay Later Economy Fits Consumer Needs\u201d now to learn more about why access to credit shapes how shoppers make critical spending decisions when emergencies occur or when there\u2019s an impulse deal that\u2019s just too good to pass up.\nThe post Consumers Turn to Credit for Cash Management When Unplanned Expenses Hit, Study Finds appeared first on PYMNTS.com.", "date_published": "2025-03-31T04:03:07-04:00", "date_modified": "2025-03-31T12:06:05-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2025/03/consumers-lack-credit-access-for-emergency-expenses.jpg", "tags": [ "credit cards", "Featured News", "News", "PYMNTS Intelligence", "PYMNTS News", "PYMNTS Study", "Splitit", "Consumer Finance" ] }, { "id": "https://www.pymnts.com/?p=2516013", "url": "https://www.pymnts.com/consumer-finance/2025/reporting-bnpl-performance-to-bureaus-may-broaden-pool-of-credit-worthy-consumers/", "title": "Reporting BNPL Performance to Bureaus May Broaden Pool of Credit-Worthy Consumers", "content_html": "PYMNTS Intelligence has detailed that consumers opt for buy now, pay later (BNPL) plans because they\u2019re convenient and accessible. More than half of the individuals that we\u2019ve surveyed have said that they\u2019d used installment options through the past year. And 76% of those consumers who used BNPL plans voiced high levels of satisfaction with those plans.
\nThe plans are widely available, and our data notes that paying over time holds appeal for users across all income levels, even high earners, where a third of consumers making more than $100,000 annually had used BNPL.\u00a0
\nFor the consumers with low credit scores or even no credit scores, the movement toward including BNPL loans in credit and underwriting decisioning \u2014 as BNPL performance is harnessed by the credit reporting agencies \u2014 is gaining momentum.\u00a0
\nThe shift may have several positive effects effect: It can help those users build credit; expand the pool of borrowers for would-be lenders, and incentivize BNPL users to manage those obligations responsibly. The potential is significant, as PYMNTS estimated here that roughly a quarter of consumers are credit marginalized, having been rejected at least once when applying for traditional forms of credit, including credit cards.
\nOn Wednesday (March 19), BNPL provider Affirm said that beginning next month, it will feed information\u00a0about all of its payment plans to Experian. The reporting will include its pay-over-time products, in addition to the monthly installments of longer-term loans that it already reports to Experian, including biweekly payment plans, Pay in 30 (single installment), Pay-in-2 and Pay-in-6 options.\u00a0
\nIn February, FICO said it would seek to add BNPL data\u00a0to its credit scoring analysis. Joint studies with Affirm, the analytics company said, found that for the 85% of consumers who had opened a new BNPL account, there was generally a consistent impact on their FICO scores. It also found that impacts on FICO Score predictiveness ranged \u201cfrom modest improvement to no adverse impact, across a range of different use cases.\u201d
\nThe read across here is that the there can be incremental improvement in the credit-worthiness profiles of BNPL users when alternative data are included. The Kansas City Fed noted in a report that \u201crefining the types of alternative data used in credit scoring and expanding consumer knowledge and comfort with alternative credit-building products may help improve adoption of alternative data and consumers\u2019 access to credit and financial well-being going forward.\u201d
\nThe additional impact of having BNPL included in credit scoring may be that consumers will be averse to \u201cstacking\u201d short-term loans, with an eye on keeping their debt loads more manageable and boosting their credit scores at the same time.
\nWe note that the reporting of the short-term loans is a work in progress, and in terms of impacting credit scores (once they are fully included), will be likely be phased in over time. In detailing bi-weekly reporting of BNPL, Equifax noted in past releases that new coding will \u201cclassify BNPL tradelines including payment history and give Equifax customers and scoring partners the ability to view and decide how to incorporate the information into their decisioning to potentially open up new mainstream financial services opportunities to more consumers.\u201d
\nA positive BNPL payment profile can help smooth the path toward consumers being underwritten for credit cards and other types of loans that are paid down over time, including car loans.
\nAs for credit performance, Klarna has maintained in its SEC filing to go public that its 30+ day delinquencies are \u201c72% lower than the credit card industry average of 4.2% in the United States based on data from the Federal Reserve Bank of St. Louis,\u201d which translates to a delinquency rate of 1.2%. Affirm\u2019s own filings reveal that 30+ day delinquency rates at the end of last year were 2.5%, similar to where they were during the pandemic.
\nThe post Reporting BNPL Performance to Bureaus May Broaden Pool of Credit-Worthy Consumers appeared first on PYMNTS.com.
\n", "content_text": "PYMNTS Intelligence has detailed that consumers opt for buy now, pay later (BNPL) plans because they\u2019re convenient and accessible. More than half of the individuals that we\u2019ve surveyed have said that they\u2019d used installment options through the past year. And 76% of those consumers who used BNPL plans voiced high levels of satisfaction with those plans.\nThe plans are widely available, and our data notes that paying over time holds appeal for users across all income levels, even high earners, where a third of consumers making more than $100,000 annually had used BNPL.\u00a0\nFor the consumers with low credit scores or even no credit scores, the movement toward including BNPL loans in credit and underwriting decisioning \u2014 as BNPL performance is harnessed by the credit reporting agencies \u2014 is gaining momentum.\u00a0 \nThe shift may have several positive effects effect: It can help those users build credit; expand the pool of borrowers for would-be lenders, and incentivize BNPL users to manage those obligations responsibly. The potential is significant, as PYMNTS estimated here that roughly a quarter of consumers are credit marginalized, having been rejected at least once when applying for traditional forms of credit, including credit cards. \nAlternative Data and the Credit Bureaus\nOn Wednesday (March 19), BNPL provider Affirm said that beginning next month, it will feed information\u00a0about all of its payment plans to Experian. The reporting will include its pay-over-time products, in addition to the monthly installments of longer-term loans that it already reports to Experian, including biweekly payment plans, Pay in 30 (single installment), Pay-in-2 and Pay-in-6 options.\u00a0\nIn February, FICO said it would seek to add BNPL data\u00a0to its credit scoring analysis. Joint studies with Affirm, the analytics company said, found that for the 85% of consumers who had opened a new BNPL account, there was generally a consistent impact on their FICO scores. It also found that impacts on FICO Score predictiveness ranged \u201cfrom modest improvement to no adverse impact, across a range of different use cases.\u201d \nThe read across here is that the there can be incremental improvement in the credit-worthiness profiles of BNPL users when alternative data are included. The Kansas City Fed noted in a report that \u201crefining the types of alternative data used in credit scoring and expanding consumer knowledge and comfort with alternative credit-building products may help improve adoption of alternative data and consumers\u2019 access to credit and financial well-being going forward.\u201d \nThe additional impact of having BNPL included in credit scoring may be that consumers will be averse to \u201cstacking\u201d short-term loans, with an eye on keeping their debt loads more manageable and boosting their credit scores at the same time.\nWe note that the reporting of the short-term loans is a work in progress, and in terms of impacting credit scores (once they are fully included), will be likely be phased in over time. In detailing bi-weekly reporting of BNPL, Equifax noted in past releases that new coding will \u201cclassify BNPL tradelines including payment history and give Equifax customers and scoring partners the ability to view and decide how to incorporate the information into their decisioning to potentially open up new mainstream financial services opportunities to more consumers.\u201d \nA positive BNPL payment profile can help smooth the path toward consumers being underwritten for credit cards and other types of loans that are paid down over time, including car loans.\nAs for credit performance, Klarna has maintained in its SEC filing to go public that its 30+ day delinquencies are \u201c72% lower than the credit card industry average of 4.2% in the United States based on data from the Federal Reserve Bank of St. Louis,\u201d which translates to a delinquency rate of 1.2%. Affirm\u2019s own filings reveal that 30+ day delinquency rates at the end of last year were 2.5%, similar to where they were during the pandemic.\nThe post Reporting BNPL Performance to Bureaus May Broaden Pool of Credit-Worthy Consumers appeared first on PYMNTS.com.", "date_published": "2025-03-21T12:10:37-04:00", "date_modified": "2025-03-21T21:21:09-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2025/03/BNPL-credit-scores-consumer-finances.jpg", "tags": [ "Affirm", "BNPL", "buy now pay later", "consumer finances", "consumer loans", "credit", "credit cards", "credit reporting", "credit score", "Experian", "installment payments", "loans", "News", "pay over time", "Payment Methods", "personal finances", "PYMNTS News", "Consumer Finance" ] }, { "id": "https://www.pymnts.com/?p=2514414", "url": "https://www.pymnts.com/consumer-finance/2025/how-oppfi-can-say-yes-to-credit-when-traditional-banks-say-no/", "title": "How OppFi Can Say Yes to Credit When Traditional Banks Say No", "content_html": "U.S. consumers hold a record $1.2 trillion in credit card debt. Right now, households are in a holding pattern, where the growth in card balances has been muted, and a spending pullback has begun in the face of tariffs and trade wars.
\nPYMNTS Intelligence has found that 67% of the U.S. population lives paycheck to paycheck, so credit can be a vital lifeline towards meeting everyday expenses. Through the past three years, as inflation spiked to near double digits and FICO scores have remained lofty (averaging north of 700), there\u2019s still a wide swath of the population \u2014 60 million individuals, 15 million of whom are unbanked and 45 million are underbanked \u2014 that remains shut out from the traditional channels of financial services.
\n\u201cThe credit access issue has not been solved,\u201d Todd Schwartz, CEO of FinTech platform OppFi, told PYMNTS\u2019 Karen Webster, adding that a vicious cycle exists in the quest to create credit worthiness. \u201cIf you\u2019re not able to get a car or a home loan, how else do you build credit? It\u2019s a real issue and it needs to be figured out.\u201d\u00a0
\nFor many of the individuals shut out from traditional credit, buy now, pay later plans have been a help, but the larger backdrop is that the aforementioned 60 million people have had missteps in their financial lives, have had to grapple with medical emergencies or other life changes, and the simple fact is that most of us have not been taught personal finance skills in school.\u00a0
\n\u201cIt\u2019s hard to rebuild your credit,\u201d he told Webster, \u201cbecause to rebuild your credit you need more credit to prove yourself \u2014 so you\u2019re already starting behind the eight ball \u2026 there are people who just don\u2019t have credit because they have never applied for it or don\u2019t use it. They rely more on debit cards and cash flow.\u201d
\nOppFi, which seeks to expand credit access through a platform model that connects individuals with community bank partners and personal loans, is focused on the population that falls in the FICO range below the 650 mark, where traditional lending options thin out.
\nBorrowers must have regular sources of income and checking/savings accounts \u2014 and the company reports the loan repayment progress to the credit bureaus, which in turn helps OppFi\u2019s customers build their credit profiles while getting the funds they need to meet the demands of emergency or unplanned expenses.
\nIn another initiative, the company has partnered with financial app Zogo, which allows users to earn rewards and gift cards while improving their financial literacy.
\n\u201cThis is a way for us to give back and make sure that people understand the products that they are using,\u201d Schwartz said.
\nEarlier this month, the company reported fourth-quarter results that detailed that net originations across its platform were up 11%, and net charge-offs had decreased markedly year over year. Guidance for current year revenues anticipate growth in the high-single digits to low-teens percentage points.\u00a0
\nHe noted to Webster that there\u2019s been \u201cstrong demand across our business\u201d as the company has revamped its underwriting models \u2014 a nod to the fact that navigating through the inflation surge that began in 2022, a 4% spike in interest rates and ensuing defaults has led the firm to \u201clook at the customer from a lifetime perspective as opposed to short-term repayments.\u201d
\nThat approach, he said, smooths out volatility, and OppFi\u2019s automated approval levels are touching 80%.\u00a0
\nThere are no prepayment penalties tied to the loans \u2014 and in fact, there\u2019s what Schwartz termed a \u201creturns policy,\u201d where consumers can decide, if they want, to give the principal back with no attendant return fees.
\n\u201cIf someone pays to term, they\u2019re paid in full,\u201d Schwartz said of the loans, \u201cso it\u2019s all easy to use and understand.\u201d\u00a0
\nThe banking partnerships in place with OppFi, Schwartz said, also benefit from the platform\u2019s two-sided approach, as underwriting at the bank account level based on cash flows improves credit risk assessment.
\n\u201cThere\u2019s a lot of growth ahead this year for our company, and there\u2019s a lot of growth ahead for our consumers \u2014 and if challenging times are ahead, we\u2019ll be there for them,\u201d Schwartz said.\u00a0
\nThe post How OppFi Can Say Yes to Credit When Traditional Banks Say No appeared first on PYMNTS.com.
\n", "content_text": "U.S. consumers hold a record $1.2 trillion in credit card debt. Right now, households are in a holding pattern, where the growth in card balances has been muted, and a spending pullback has begun in the face of tariffs and trade wars.\nPYMNTS Intelligence has found that 67% of the U.S. population lives paycheck to paycheck, so credit can be a vital lifeline towards meeting everyday expenses. Through the past three years, as inflation spiked to near double digits and FICO scores have remained lofty (averaging north of 700), there\u2019s still a wide swath of the population \u2014 60 million individuals, 15 million of whom are unbanked and 45 million are underbanked \u2014 that remains shut out from the traditional channels of financial services.\nCredit Access is a Widespread Issue \n\u201cThe credit access issue has not been solved,\u201d Todd Schwartz, CEO of FinTech platform OppFi, told PYMNTS\u2019 Karen Webster, adding that a vicious cycle exists in the quest to create credit worthiness. \u201cIf you\u2019re not able to get a car or a home loan, how else do you build credit? It\u2019s a real issue and it needs to be figured out.\u201d\u00a0 \nFor many of the individuals shut out from traditional credit, buy now, pay later plans have been a help, but the larger backdrop is that the aforementioned 60 million people have had missteps in their financial lives, have had to grapple with medical emergencies or other life changes, and the simple fact is that most of us have not been taught personal finance skills in school.\u00a0 \n\u201cIt\u2019s hard to rebuild your credit,\u201d he told Webster, \u201cbecause to rebuild your credit you need more credit to prove yourself \u2014 so you\u2019re already starting behind the eight ball \u2026 there are people who just don\u2019t have credit because they have never applied for it or don\u2019t use it. They rely more on debit cards and cash flow.\u201d\nOppFi, which seeks to expand credit access through a platform model that connects individuals with community bank partners and personal loans, is focused on the population that falls in the FICO range below the 650 mark, where traditional lending options thin out. \nBorrowers must have regular sources of income and checking/savings accounts \u2014 and the company reports the loan repayment progress to the credit bureaus, which in turn helps OppFi\u2019s customers build their credit profiles while getting the funds they need to meet the demands of emergency or unplanned expenses. \nIn another initiative, the company has partnered with financial app Zogo, which allows users to earn rewards and gift cards while improving their financial literacy. \n\u201cThis is a way for us to give back and make sure that people understand the products that they are using,\u201d Schwartz said.\nFine-Tuning the Model\nEarlier this month, the company reported fourth-quarter results that detailed that net originations across its platform were up 11%, and net charge-offs had decreased markedly year over year. Guidance for current year revenues anticipate growth in the high-single digits to low-teens percentage points.\u00a0 \nHe noted to Webster that there\u2019s been \u201cstrong demand across our business\u201d as the company has revamped its underwriting models \u2014 a nod to the fact that navigating through the inflation surge that began in 2022, a 4% spike in interest rates and ensuing defaults has led the firm to \u201clook at the customer from a lifetime perspective as opposed to short-term repayments.\u201d \nThat approach, he said, smooths out volatility, and OppFi\u2019s automated approval levels are touching 80%.\u00a0 \nThere are no prepayment penalties tied to the loans \u2014 and in fact, there\u2019s what Schwartz termed a \u201creturns policy,\u201d where consumers can decide, if they want, to give the principal back with no attendant return fees. \n\u201cIf someone pays to term, they\u2019re paid in full,\u201d Schwartz said of the loans, \u201cso it\u2019s all easy to use and understand.\u201d\u00a0\nThe banking partnerships in place with OppFi, Schwartz said, also benefit from the platform\u2019s two-sided approach, as underwriting at the bank account level based on cash flows improves credit risk assessment.\n\u201cThere\u2019s a lot of growth ahead this year for our company, and there\u2019s a lot of growth ahead for our consumers \u2014 and if challenging times are ahead, we\u2019ll be there for them,\u201d Schwartz said.\u00a0\nThe post How OppFi Can Say Yes to Credit When Traditional Banks Say No appeared first on PYMNTS.com.", "date_published": "2025-03-20T04:03:25-04:00", "date_modified": "2025-03-19T22:06:50-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2025/03/OppFI.jpg", "tags": [ "consumer finances", "consumer loans", "credit", "credit cards", "credit scores", "Featured News", "FICO scores", "financial inclusion", "financial services", "loans", "News", "OppFi", "personal finances", "PYMNTS News", "pymnts tv", "Todd Schwartz", "video", "Consumer Finance" ] }, { "id": "https://www.pymnts.com/?p=2513969", "url": "https://www.pymnts.com/consumer-finance/2025/blocks-direct-lending-move-aims-at-filling-consumer-credit-gaps/", "title": "Block\u2019s Direct Lending Move Aims at Filling Consumer Credit Gaps", "content_html": "The platforms that have banks embedded in their operations are taking more of their lending activities into a direct model, giving momentum to income streams well beyond the confines of peer-to-peer transactions.
\nAs had been reported last week, Block said that its Square Financial Services industrial bank has gotten the nod from the Federal Deposit Insurance Corp. to make consumers loans directly to borrowers, using Cash App Borrow. The announcement represents a shift, as the firm had previously made the loans through its external banking partner. By bringing the loan originating and servicing functions in house, Block retains the revenue streams associated with that lending.
\n\u201cCash App Borrow is designed to provide short-term cash flow in a simple and accessible way when alternatives are notoriously expensive and difficult for consumers to navigate,\u201d the company said in a release, adding that under the external bank partnership model, the short term offering had seen $9 billion in originations last year.\u00a0
\nThe announcement also represents a broadening of Square Financial Services\u2019 reach, as the operation had been offering Square sellers business loans and savings accounts.\u00a0 Savings balances tied to those activities had been $300 million at the end of last year.
\nSquare noted that the same underwriting mechanisms that have been used for the business loans will now be used for the consumer-facing lending. The push into short-term lending comes as PYMNTS Intelligence has found that traditional avenues for credit access have been narrowing. By way of example, 29% of subprime consumers have applied for and been denied a credit card, compared to 12% of super-prime consumers.
\nIn its 10-K filing, accessible here, the company details that its banking strategy seeks to \u201cbank our base, move upmarket by serving families\u201d and strives to \u201cbuild the next generation social bank.\u201d\u00a0
\nCash App Card, the company has said, is the \u201centry point into a deeper banking relationship\u201d with Block. Within the subscription and services based sales that that includes the Cash App offerings (and Cash App Borrow), Block\u2019s $7.2 billion in revenues grew by 21% year over year, far outpacing the 5% seen with transaction-based revenues.
\nIn other examples of the ways in which lending platforms are using the direct model to have some more skin in the game \u2014 as underwriting those loans with the advantage of the data flowing across those platforms \u2014 LendingClub disclosed in its latest annual filing that loans held by its LendingClub Bank totaled $5.1 billion at the end of last year, up 8% year over year. LendingClub Bank took shape upon LendingClub\u2019s acquisition of Radius Bank, a pact struck in 2020.
\nSoFi Bank, which exists as a division of SoFi Technologies, said in its own 10-K that, in the wake of acquiring Golden Pacific, \u00a0and in addition to offering checking accounts, savings and credit cards through SoFi Bank, \u201cwe are originating all new loans within\u201d that operation.
\nHolding more loans on its balance sheet allows the company to earn interest on those loans. The filings reveal that personal loans in the most recent quarter surged 26% year over year to $1.4 billion.\u00a0
\nAnd in a nod to the ecosystem effect, SoFi said the financial services revenue per product increased from $59 in the fourth quarter of 2023 to $81 in the fourth quarter of last year and its roster of 10 million individuals is up 34% year over year.\u00a0
\nRecent initiatives to expand the platform include the announcement last week that the company has finalized an agreement with Blue Owl Capital worth at least $5 billion. The deal with the asset manager will allow SoFi to expand its loan platform business, which refers prequalified borrowers to loan origination partners and originates loans on behalf of third parties.\u00a0
\nThe post Block\u2019s Direct Lending Move Aims at Filling Consumer Credit Gaps appeared first on PYMNTS.com.
\n", "content_text": "The platforms that have banks embedded in their operations are taking more of their lending activities into a direct model, giving momentum to income streams well beyond the confines of peer-to-peer transactions.\nAs had been reported last week, Block said that its Square Financial Services industrial bank has gotten the nod from the Federal Deposit Insurance Corp. to make consumers loans directly to borrowers, using Cash App Borrow. The announcement represents a shift, as the firm had previously made the loans through its external banking partner. By bringing the loan originating and servicing functions in house, Block retains the revenue streams associated with that lending.\n\u201cCash App Borrow is designed to provide short-term cash flow in a simple and accessible way when alternatives are notoriously expensive and difficult for consumers to navigate,\u201d the company said in a release, adding that under the external bank partnership model, the short term offering had seen $9 billion in originations last year.\u00a0 \nThe announcement also represents a broadening of Square Financial Services\u2019 reach, as the operation had been offering Square sellers business loans and savings accounts.\u00a0 Savings balances tied to those activities had been $300 million at the end of last year.\nSquare noted that the same underwriting mechanisms that have been used for the business loans will now be used for the consumer-facing lending. The push into short-term lending comes as PYMNTS Intelligence has found that traditional avenues for credit access have been narrowing. By way of example, 29% of subprime consumers have applied for and been denied a credit card, compared to 12% of super-prime consumers.\nIn its 10-K filing, accessible here, the company details that its banking strategy seeks to \u201cbank our base, move upmarket by serving families\u201d and strives to \u201cbuild the next generation social bank.\u201d\u00a0 \nCash App Card, the company has said, is the \u201centry point into a deeper banking relationship\u201d with Block. Within the subscription and services based sales that that includes the Cash App offerings (and Cash App Borrow), Block\u2019s $7.2 billion in revenues grew by 21% year over year, far outpacing the 5% seen with transaction-based revenues. \nLoan Growth on Other Platforms\nIn other examples of the ways in which lending platforms are using the direct model to have some more skin in the game \u2014 as underwriting those loans with the advantage of the data flowing across those platforms \u2014 LendingClub disclosed in its latest annual filing that loans held by its LendingClub Bank totaled $5.1 billion at the end of last year, up 8% year over year. LendingClub Bank took shape upon LendingClub\u2019s acquisition of Radius Bank, a pact struck in 2020.\nSoFi Bank, which exists as a division of SoFi Technologies, said in its own 10-K that, in the wake of acquiring Golden Pacific, \u00a0and in addition to offering checking accounts, savings and credit cards through SoFi Bank, \u201cwe are originating all new loans within\u201d that operation. \nHolding more loans on its balance sheet allows the company to earn interest on those loans. The filings reveal that personal loans in the most recent quarter surged 26% year over year to $1.4 billion.\u00a0 \nAnd in a nod to the ecosystem effect, SoFi said the financial services revenue per product increased from $59 in the fourth quarter of 2023 to $81 in the fourth quarter of last year and its roster of 10 million individuals is up 34% year over year.\u00a0 \nRecent initiatives to expand the platform include the announcement last week that the company has finalized an agreement with Blue Owl Capital worth at least $5 billion. The deal with the asset manager will allow SoFi to expand its loan platform business, which refers prequalified borrowers to loan origination partners and originates loans on behalf of third parties.\u00a0 \nThe post Block\u2019s Direct Lending Move Aims at Filling Consumer Credit Gaps appeared first on PYMNTS.com.", "date_published": "2025-03-18T18:35:26-04:00", "date_modified": "2025-03-18T18:35:26-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2025/03/Block-loans.jpg", "tags": [ "banking", "Block", "Cash App", "Cash App Borrow", "Consumer Finance", "consumer lending", "consumer loans", "Digital Banking", "digital lending", "LendingClub", "News", "PYMNTS News", "SoFi", "Square", "Square Financial Services" ] }, { "id": "https://www.pymnts.com/?p=2511798", "url": "https://www.pymnts.com/consumer-finance/2025/square-financial-services-to-service-and-originate-cash-app-borrow-loans/", "title": "Square Financial Services to Service and Originate Cash App Borrow Loans", "content_html": "Block said Thursday (March 13) that its industrial bank, Square Financial Services (SFS), received approval from the Federal Deposit Insurance Corp. (FDIC) to offer the company\u2019s consumer loan product Cash App Borrow.
\nSFS will begin servicing and originating Cash App Borrow loans nationwide in the coming weeks, replacing Block\u2019s current external bank partner, Block said in a Thursday press release.
\nCash App Borrow provides small, short-term consumer loans \u2014 typically less than $100 and about one month in duration \u2014 to Cash App customers in a simple and accessible way that includes making payments within Cash App, according to the release.
\nThe short-term credit product saw nearly $9 billion in originations in 2024 offered by Block through its external bank partner. Most customers pay on time, and the product\u2019s historic loss rates are under 3%, the release said.
\nSFS will continue to offer business loans through Square Loans and interest-bearing business savings accounts through Square Savings, per the release.
\n\u201cAcross Block we\u2019re focused on building technology to increase access to the economy, and Square Financial Services is a critical tool in helping us deliver on that,\u201d Amrita Ahuja, chief operating officer and chief financial officer of Block and executive chairwoman of the board of directors for SFS, said in the release. \u201cThe bank allows us to provide a clear path to cash flow using our proven underwriting mechanisms for businesses and now consumers who are not well served by the traditional banking and credit systems.\u201d
\nBlock executives said during a Feb. 20 earnings call that the company plans to continue doubling down on traditional banking territory in the year ahead, as it did for much of the past fiscal year.
\nFor example, executives pointed to Cash App\u2019s continuing evolution that has included the addition of an expanded suite of banking features including high-yield savings, paycheck allocation to investments and free tax filing. They noted that Cash App Borrow\u2019s nearly $9 billion in originations demonstrates strong demand for micro-lending services.
\nIn a shareholder letter, Block said: \u201cOur goal is to make Cash App the top provider of banking services to households in the United States that earn up to $150,000 per year.\u201d
\nThe post Square Financial Services to Service and Originate Cash App Borrow Loans appeared first on PYMNTS.com.
\n", "content_text": "Block said Thursday (March 13) that its industrial bank, Square Financial Services (SFS), received approval from the Federal Deposit Insurance Corp. (FDIC) to offer the company\u2019s consumer loan product Cash App Borrow.\nSFS will begin servicing and originating Cash App Borrow loans nationwide in the coming weeks, replacing Block\u2019s current external bank partner, Block said in a Thursday press release.\nCash App Borrow provides small, short-term consumer loans \u2014 typically less than $100 and about one month in duration \u2014 to Cash App customers in a simple and accessible way that includes making payments within Cash App, according to the release.\nThe short-term credit product saw nearly $9 billion in originations in 2024 offered by Block through its external bank partner. Most customers pay on time, and the product\u2019s historic loss rates are under 3%, the release said.\nSFS will continue to offer business loans through Square Loans and interest-bearing business savings accounts through Square Savings, per the release.\n\u201cAcross Block we\u2019re focused on building technology to increase access to the economy, and Square Financial Services is a critical tool in helping us deliver on that,\u201d Amrita Ahuja, chief operating officer and chief financial officer of Block and executive chairwoman of the board of directors for SFS, said in the release. \u201cThe bank allows us to provide a clear path to cash flow using our proven underwriting mechanisms for businesses and now consumers who are not well served by the traditional banking and credit systems.\u201d\nBlock executives said during a Feb. 20 earnings call that the company plans to continue doubling down on traditional banking territory in the year ahead, as it did for much of the past fiscal year.\nFor example, executives pointed to Cash App\u2019s continuing evolution that has included the addition of an expanded suite of banking features including high-yield savings, paycheck allocation to investments and free tax filing. They noted that Cash App Borrow\u2019s nearly $9 billion in originations demonstrates strong demand for micro-lending services.\nIn a shareholder letter, Block said: \u201cOur goal is to make Cash App the top provider of banking services to households in the United States that earn up to $150,000 per year.\u201d\nThe post Square Financial Services to Service and Originate Cash App Borrow Loans appeared first on PYMNTS.com.", "date_published": "2025-03-13T21:03:19-04:00", "date_modified": "2025-03-13T23:02:18-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2025/03/Cash-App-.jpg", "tags": [ "Amrita Ahuja", "banking", "Block", "Cash App Borrow", "Consumer Finance", "FDIC", "Lending", "News", "PYMNTS News", "Square", "Square Financial Services", "Square Loans", "Square Savings", "What's Hot" ] }, { "id": "https://www.pymnts.com/?p=2510400", "url": "https://www.pymnts.com/consumer-finance/2025/subprime-borrowers-seek-strategies-to-improve-their-credit-scores/", "title": "Subprime Borrowers Seek Strategies to Improve Their Credit Scores", "content_html": "The pressures of mounting card debt, still-high interest rates and tightening underwriting threaten to expand the ranks of subprime borrowers \u2014 all the while making it harder for those consumers to improve their credit standings.
\nIn the report \u201cSubprime Borrowers Flock to Alternative Options Due to High Credit Card Denial Rates,\u201d we found that borrowers with FICO scores of 620 or less have higher denial rates than seen with other cohorts of borrowers.
\nThere\u2019s a vicious cycle here, where banks, the traditional lenders, have found that traditional risk-scoring metrics are less adept at determining where or when to extend credit.\u00a0
\nThat, in turn, limits the credit cards or other types of loans available to those would-be borrowers. And then, of course, without those loans or credit products in hand, with a paydown history attached to them, it becomes harder for those subprime consumers to boost their credit scores, which then improves credit access.
\nTwenty-nine percent of subprime consumers have applied for and been denied a credit card, compared to 12% of super-prime consumers.
\nAnd yet, PYMNTS Intelligence has found that subprime consumers are willing \u2013 and have been trying \u2013 to find new ways to improve their credit. The attack is two-pronged, where these same consumers are using the credit they do have to manage how they pay for essential goods and services, and satisfy those obligations.
\nOf the more than 2,300 consumers that we surveyed earlier in the year, the data shows that 57% percent of subprime borrowers have access to credit cards, and 21% use them to make essential purchases to improve their credit score.\u00a0
\nThat leaves a gap, given the fact that 43% of this segment does not have access to the traditional lines of credit. But one-quarter of consumers with low credit scores use credit for nonessential expenses with the specific intent of raising their credit score. As for the action of adding purchases to the cards, and paying them down, we found that subprime borrowers are 30% more likely than consumers with high credit scores to use credit on nonessential items specifically to raise their credit score.
\n\n\n\n
There\u2019s evidence that enlarging the pool of debt types that are used to calculate credit scores (and for providers and issuers, expanding their actual range of loan offerings) may have a beneficial effect.\u00a0
\nIn one example, we found that subprime are more likely to have applied for loans and buy now, pay later (BNPL). For instance, 40% of subprime borrowers have applied for BNPL, compared to 27% of super-prime consumers. Moreover, subprime consumers are 2.1 times more likely to have applied for a payday or credit-builder loan than those with higher credit scores.
\nFor the issuer and the lenders, the long-term benefits should be apparent in the fact that subprime borrowers are 3.6 times more likely to show interest in getting a new credit card than those with the highest credit scores. While 12% of subprime consumers report interest in obtaining a new credit card, just 3.2% of super-prime borrowers say the same.\u00a0
\nThe lower echelons of credit-rated consumers also state that they are interested in personal loans and auto loans, which would further deepen their relationships with banks. FIs would be well-advised to develop strategies for serving the subprime market responsibly with secured credit cards and other credit-building instruments that appeal to subprime individuals.
\nThe post Subprime Borrowers Seek Strategies to Improve Their Credit Scores appeared first on PYMNTS.com.
\n", "content_text": "The pressures of mounting card debt, still-high interest rates and tightening underwriting threaten to expand the ranks of subprime borrowers \u2014 all the while making it harder for those consumers to improve their credit standings.\nIn the report \u201cSubprime Borrowers Flock to Alternative Options Due to High Credit Card Denial Rates,\u201d we found that borrowers with FICO scores of 620 or less have higher denial rates than seen with other cohorts of borrowers.\nThe Vicious Cycle\nThere\u2019s a vicious cycle here, where banks, the traditional lenders, have found that traditional risk-scoring metrics are less adept at determining where or when to extend credit.\u00a0 \nThat, in turn, limits the credit cards or other types of loans available to those would-be borrowers. And then, of course, without those loans or credit products in hand, with a paydown history attached to them, it becomes harder for those subprime consumers to boost their credit scores, which then improves credit access. \nTwenty-nine percent of subprime consumers have applied for and been denied a credit card, compared to 12% of super-prime consumers.\nAnd yet, PYMNTS Intelligence has found that subprime consumers are willing \u2013 and have been trying \u2013 to find new ways to improve their credit. The attack is two-pronged, where these same consumers are using the credit they do have to manage how they pay for essential goods and services, and satisfy those obligations.\nWho Has Access \u2014 and Who Doesn\u2019t\nOf the more than 2,300 consumers that we surveyed earlier in the year, the data shows that 57% percent of subprime borrowers have access to credit cards, and 21% use them to make essential purchases to improve their credit score.\u00a0 \nThat leaves a gap, given the fact that 43% of this segment does not have access to the traditional lines of credit. But one-quarter of consumers with low credit scores use credit for nonessential expenses with the specific intent of raising their credit score. As for the action of adding purchases to the cards, and paying them down, we found that subprime borrowers are 30% more likely than consumers with high credit scores to use credit on nonessential items specifically to raise their credit score.\n\n\n \nThere\u2019s evidence that enlarging the pool of debt types that are used to calculate credit scores (and for providers and issuers, expanding their actual range of loan offerings) may have a beneficial effect.\u00a0 \nIn one example, we found that subprime are more likely to have applied for loans and buy now, pay later (BNPL). For instance, 40% of subprime borrowers have applied for BNPL, compared to 27% of super-prime consumers. Moreover, subprime consumers are 2.1 times more likely to have applied for a payday or credit-builder loan than those with higher credit scores. \nFor the issuer and the lenders, the long-term benefits should be apparent in the fact that subprime borrowers are 3.6 times more likely to show interest in getting a new credit card than those with the highest credit scores. While 12% of subprime consumers report interest in obtaining a new credit card, just 3.2% of super-prime borrowers say the same.\u00a0 \nThe lower echelons of credit-rated consumers also state that they are interested in personal loans and auto loans, which would further deepen their relationships with banks. FIs would be well-advised to develop strategies for serving the subprime market responsibly with secured credit cards and other credit-building instruments that appeal to subprime individuals.\nThe post Subprime Borrowers Seek Strategies to Improve Their Credit Scores appeared first on PYMNTS.com.", "date_published": "2025-03-12T04:00:34-04:00", "date_modified": "2025-03-11T19:19:44-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2025/03/subprime-credit-score.jpg", "tags": [ "BNPL", "buy now pay later", "Consumer Finance", "credit cards", "credit scores", "Featured News", "News", "PYMNTS Intelligence", "PYMNTS News", "subprime borrowers" ] }, { "id": "https://www.pymnts.com/?p=2509667", "url": "https://www.pymnts.com/consumer-finance/2025/who-is-the-paycheck-to-paycheck-consumer-in-america/", "title": "Who Is the Paycheck-to-Paycheck Consumer in America?", "content_html": "A six-figure income, a house in a nice neighborhood, two cars in the garage and kids in private schools \u2014 yet still feeling panicked when an emergency expense hits. And while the Fed once held out $400 as the average emergency expense threshold, that unexpected expense is now more likely to be about three times as much.
\nFor millions of Americans, this isn\u2019t a hypothetical \u2014 it\u2019s their reality.
\nToday, some 67% of Americans say they live paycheck to paycheck, according to a recent PYMNTS Intelligence study. The paycheck-to-paycheck lifestyle spans income brackets, education levels and professions. The every-other-week rhythm of waiting for the next paycheck has become America\u2019s most common financial heartbeat.
\nRead More: Paycheck-to-\u200bPaycheck Ranks Swell as Rising Prices Erode Savings
\nLiving paycheck to paycheck means consumers need their next paycheck to meet their monthly obligations. How much of a cash cushion they have is hugely important in determining how far consumers are willing to push their paychecks every month \u2014 and how stressed out they might be if faced with an unexpected financial shock.
\nA possibility that could become more of a certainty as the latest news out of Washington is that President Trump declines to rule out the possibility of a recession in 2025\u00a0\u2014 and lots of analysts agree.
\nFor me, the paycheck-to-paycheck conversation was turned on its head about nine years ago.
\nIn May 2016, I came across a cover story in The Atlantic titled \u201cThe Secret Shame of Middle Class Americans.\u201d The author, Neil Gaber, described his personal story of living paycheck to paycheck, despite a career as a successful writer, and \u2014 in his words \u2014 being \u201creasonably prosperous.\u201d
Although he was \u201cnowhere near rich,\u201d he earned a \u201cmiddle to upper-middle income\u201d salary, lived in Manhattan and sent his two daughters to private school. Yet, he describes being unable to cobble together enough money to cover a $400 emergency expense without having to ask friends or family members, including his own grown daughters sometimes, to pitch in.
\nHis 6156-word story wasn\u2019t intended to garner sympathy. It was intended to shed light on the paycheck-to-paycheck treadmill that he and his family \u2014 and, he contended, many middle-income Americans \u2014 were on.
\nGaber described the emotional toll that his \u201cfinancial impotence\u201d took as he tried hard to shield the family from the many financial bumps in the road. \u00a0He admits that most of his financial issues were related to the lumpy nature of how he was paid: lump sum book advances that created tax issues and the need for disciplined financial management over several years as he completed his novels.
\nThen there were unexpected ups and downs of life that delivered painful financial gotchas.
\nSelling his co-op in Manhattan to reduce his monthly housing costs took two years, during which time he paid double housing costs; book deals took longer to finalize and writing gigs got axed. Saving money was a challenge. Credit cards helped stretch his income but came with revolving debt at high interest rates that only compounded the problem.
\nBut mostly, Gaber said, his paycheck-to-paycheck lifestyle was his choice.
\nHis choice to be a writer, and specifically a novelist, with the unpredictable income swings and caps inherent in that profession. His choice to live in New York rather than a cheaper place. His choice to pay for private school and college for his girls, their weddings and childcare as they grew up.
\nGaber said that his paycheck-to-paycheck lifestyle wasn\u2019t the result of living \u201can extravagant lifestyle\u201d but something more fundamental: too little income, too many expenses in the choices he and his wife made. And those choices had consequences over time, including an inability to save as much as he needed or wanted to.
\nHis story stuck with me, mostly because it was antithetical to the stereotypical paycheck-to-paycheck persona: poor, uneducated, unemployed, with few future prospects.
\nAnd Gaber\u2019s claim that more middle-class Americans fit that definition than were willing to admit it.
\nIn March of 2020, the PYMNTS Intelligence team began to benchmark the paycheck-to-paycheck status of Americans as part of our monthly consumer studies related to COVID, the digital shift and how people spent and saved their money.
\nIt seemed\u00a0 like a good time to gather and benchmark intelligence about how consumers would spend and save their income.
\nThe U.S. was entering a once-in-a-hundred-year global pandemic, a period of instability and uncertainty. Documenting all the puts and takes would offer important insights for businesses, startups and investors. To our knowledge, this effort is the largest dataset documenting the shift to digital and the related spending and payments behaviors over that period \u2014 and those studies continue to this day.
\nTo capture the paycheck-to-paycheck sentiment, we asked U.S. consumers to self-report their financial lifestyle against whether they need their next paycheck to meet their monthly financial obligations. And if they say they do, whether they can do that comfortably or whether they will struggle to make all payments on time.
\nOur results over this five-year period are remarkably consistent with the personal story Gaber recounted in May 2016.
\nThey suggest that the American consumer\u2019s relationship with money goes well beyond simple income calculations. It speaks to their values, priorities and the complex balancing act between choice and necessity that shapes those personal financial decisions.
\nLike Gaber\u2019s account in 2016, the American consumer\u2019s paycheck-to-paycheck status is shaped by financial obligations and lifecycle, not just income. It is often based on the choices people make about how they align their expenses to their paychecks.
\nIt\u2019s not about being \u201cpoor.\u201d And alternatively, not living paycheck to paycheck isn\u2019t about being \u201crich\u201d \u2014 even though most people prefer to define it in those stark terms.
\nIt isn\u2019t even about whether consumers save or don\u2019t. In fact, 4% of people living paycheck to paycheck and who report having issues paying their monthly bills and 5% of those say they live paycheck to paycheck without issues say that savings and investments are part of how they allocate their monthly income.
\nInstead, we find that paycheck-to-paycheck living spans all income levels, including half of high earners (defined as those earning $100,000 or more each year) as of January 2025. Across all income groups, people report similar abilities to pay their monthly bills without a struggle but needing the next paycheck to stay on track. This implies that living paycheck to paycheck isn\u2019t solely about financial hardship or an inability to meet basic needs, but how people choose to manage their monthly income.
\nHere\u2019s an example.
\nIn November 2024, high-income individuals (those earning $100,000+ annually) constituted a larger portion of struggling paycheck-to-paycheck consumers than middle-income earners. At the same time, from January to April 2023, nearly 25% of lower-income individuals reported not living paycheck to paycheck, a figure that declined to just 16% by January 2025.
\nConversely, the proportion of higher-income people not living paycheck to paycheck increased slightly, though with significant fluctuations throughout this period. This disparity between lower-, middle- and higher-income groups indicates either similar cost pressures across income levels or potentially different spending choices among higher earners.
\n\n\nThat suggests that paycheck-to-paycheck living is a continuum between choice and necessity. This choice-necessity framework provides a unique lens for understanding the dynamic nature of paycheck-to-paycheck behaviors.
\nOur research reveals that 21% of American consumers (37 million) live paycheck to paycheck primarily out of necessity \u2014 there is a significant mismatch between money in and money out every month. More than half \u2014 54%,or some 93 million consumers \u2014 do so due to a blend of choices about how they spend their paychecks and circumstances that create unexpected financial events. And 25% live this way predominantly by choice.
\nHigher earners cite family support obligations (such as kids at home and their attendant expenses), debt payments and higher spending on discretionary items \u2014 food out, vacations, clothes \u2014 for living paycheck to paycheck by choice. Lower-income earners point to wages that are insufficient to cover the rising costs of basics like housing and food for living paycheck to paycheck out of necessity.
\nA quarter of middle-income paycheck-to-paycheck consumers live this way by choice, unforced by necessity. Like their higher-income counterparts, their decisions, by default, become necessities as they have defined them. Sending their kids to private school, like Gaber did, was a choice, but one that he and his wife considered a necessity.
\nBy contrast, over half of lower-income paycheck-to-paycheck consumers report necessity as their primary driver, because so much of their paycheck is allocated to paying for basic essentials.
\nNotably, the proportion of low-income consumers living paycheck to paycheck by choice has increased 5% since 2023, while necessity-driven cases rose 3%, indicating a growing polarization in how lower income consumers now manage their income to expense ratio every month.
\nAlthough these lower-income individuals are more likely to be living paycheck to paycheck by necessity, almost 1 in 4 are living this way by choice. The choice-driven group tends to be younger (Gen Z or millennials), and they are more likely to have children.
\nWhether consumers are driven by choice or necessity varies by income and generation, and by how much money they have in the bank.
\nPeople who live paycheck to paycheck by choice have about $1,400 more in savings than those living paycheck by necessity. And, although inadequate savings correlate with financial hardship for some, others maintain substantial savings, yet still spend most of their income each pay period.
\n\n
\nChoice versus necessity determines how consumers spend their paychecks every month. Regardless of how consumers define their paycheck-to-paycheck status, everyone allocates some of their income to the basics \u2014 housing and groceries.\u00a0However (and not surprisingly), consumers whose paycheck-to-paycheck lifestyle is shaped more by more choice than necessity allocate more of their income to discretionary expenses.
More than two-thirds of those consumers chose to spend money on social activities at least once a month in the past year, compared to 43% of those who live paycheck to paycheck out of necessity. Consumers who live paycheck to paycheck out of necessity are half as likely to be planning to spend on leisure, entertainment and recreational activities because they lack the cash to spend on discretionary items.
\n\n
\nHow paycheck-to-paycheck consumers use credit cards varies. We know that\u00a090.5% of American consumers who want credit cards have and use them. According to the latest Federal Reserve data, American consumers have more than $1.4 trillion in credit card outstandings. Consumers have always used credit to leverage their spending power, and consumers across all paycheck-to-paycheck personas use it for that reason.
Consumers living paycheck to paycheck either by choice or necessity have higher credit card balances than those who say they don\u2019t \u2014 and obviously for different reasons. Those who say they struggle with meeting their monthly financial obligations are much more likely to revolve their balances, using credit to fill in the gaps between paychecks or to ride the storm when unexpected expenses arise.
\nA third more consumers who report struggling to meet their monthly obligations say they always revolve their credit card balances than those who say they comfortably pay their bills each month. The share of struggling paycheck-to-paycheck consumers who usually or always revolve their credit card balances has risen 7.4 percentage points since 2023.
\n\n
\nSavings tips the balance of the paycheck-to-paycheck lifestyle. Having cash savings significantly changes how people view their financial situation and how they save or spend accordingly. Living paycheck to paycheck \u2014 or not \u2014 is also influenced by how confident people are about the adequacy of their cash cushions if something goes haywire.
During COVID-19, fewer American consumers reported living paycheck to paycheck despite higher unemployment. This unexpected trend occurred because stimulus checks and enhanced unemployment benefits provided many households with unprecedented cash reserves. Between 2021-2023, the percentage of Americans reporting paycheck-to-paycheck living dropped to 54.5% as debts decreased and savings grew.
\nHaving savings doesn\u2019t automatically change whether people still think of themselves as living paycheck to paycheck, but it\u2019s an important factor, especially for those living paycheck to paycheck by choice.
\nWe find that just over 40% of people with $2,500 to $5,000 in savings still choose to live paycheck to paycheck. Those with less than $1,000 in income are both more likely to live paycheck to paycheck and more likely to do so by necessity. And with $1,000 to $5,000 in savings, they \u00a0feel they have some security but are more nervous, and an emergency expense of $1,200 might be enough to tip those scales.
\nThe data also reveals a significant decline in self-reported paycheck-to-paycheck status once savings exceed $5,000. Those who continue identifying as paycheck to paycheck despite having over $5,000 saved appear to do so by choice rather than necessity, as they report comfort with their bill-paying ability including spending on discretionary items, while maintaining a safety net for unexpected expenses.
\n\n
\nThe largest generational cohort of consumers who report living paycheck to paycheck out of necessity are single millennials, many of whom live in rural locations. A third of those millennials have dependent children living at home \u2014 spending is about providing for their families, with little room for much else.
Analyzing five years of PYMNTS Intelligence data reveals two critical income thresholds in describing the financial lifestyle of consumers.
\nThe data finds that the first significant threshold occurs at $45,000-$49,999, when individuals begin to shift from struggling paycheck-to-paycheck living to a more comfortable paycheck-to-paycheck lifestyle.
\nThe second critical threshold appears in the $125,000-$149,999 range, where people become increasingly likely to say they no longer live paycheck to paycheck either by choice or necessity.
\nAs income climbs to more than $85,000 per year the incidence of living paycheck to paycheck by choice begins to decline as more and more consumers indicate they no longer live paycheck to paycheck at all. What\u2019s particularly interesting is that this shift is not universal, and many individuals with moderate to high incomes continue living paycheck to paycheck despite having the financial capacity to do otherwise. They\u2019re comfortable paying bills but still spend most of their income monthly because of their monthly income and savings backstop.
\nSince these individuals can pay their bills comfortably, their continued paycheck-to-paycheck status suggests deliberate spending choices on more or more expensive things, rather than pure income constraints. These choices might include supporting dependents, purchasing larger homes or even second homes, or using private schools.
\nIf paycheck-to-paycheck status were solely dictated by income necessity, we would expect to see a much steeper decline in all paycheck categories as income increases. However, the gradual nature of this decline suggests other factors at play, including the fact that consumers with incomes over $250,000 are 30% more likely to continue to live paycheck to paycheck (generally by choice).
\nThe key insight is that even as financial capacity increases with higher incomes, many individuals continue to choose to live paycheck to paycheck rather than transitioning to non-paycheck-to-paycheck status.
\nIt\u2019s been 15 years since the U.S. experienced a great recession, even though there was a slight dip in 2020 owing to the COVID shutdown. Today\u2019s environment of economic uncertainty and rising prices, the threat of tariffs and the current administration\u2019s hints at a likely recession have significant implications for all consumers and how they will spend their paychecks in the weeks and months ahead.
\nConsumers across all income brackets are likely to pull back on spending, but for different reasons. Those with savings cushions may voluntarily push pause on spending until they have more certainty in order to preserve cash and income, while those without financial shock absorbers in the form of savings will be forced to cut back out of necessity.
\nThe \u201ccomfortable paycheck-to-paycheck\u201d group faces particular vulnerability as economic pressures mount. The Fed is unlikely to lower interest rates in the foreseeable future, and if there is inflation because of tariffs, rates might go even higher. That\u2019s bad news for consumers with adjustable mortgage rates that are set to rollover from historically low levels around 3% \u2014 just as interest rates on their credit cards and other loans rise. That means new monthly paycheck pressures owing to the increased cost of housing and credit card debt, especially if wages don\u2019t keep pace.
\nAs basic goods become more expensive due to tariffs and rising production costs, these consumers could also see their discretionary income significantly reduced.
\nPYMNTS Intelligence finds that more than half of consumers surveyed in February 2025 who are knowledgeable about the proposed tariffs said their wallets would take a beating; 78% said because of higher prices, and 75% because of product shortages. Many who were previously managing comfortably may find themselves sliding into the \u201cstruggling paycheck-to-paycheck\u201d category as more of their paychecks are allocated to the basics whose monthly costs continue to rise.
\nRead more: What American Consumers and Small Businesses Think About Tariffs
\nThat, of course, assumes consumers have a paycheck.
\nThe labor market is starting to soften \u2014 and not because of the government layoffs, which impact a relatively small part of the American workforce overall. As businesses face their own uncertainty, they will likely freeze hiring, expenses and investments to grow the business. The ripple effect of this uncertainty itself is its own force.
\nAs more consumers shift from choice-based financial decisions to those driven by necessity, overall consumption could contract, challenging economic growth. Retailers and service providers may need to adjust their strategies to address a growing segment of more price-sensitive consumers across income brackets if they hope to make a sale. Even wealthy consumers who don\u2019t live paycheck to paycheck may pull back after looking at their stock portfolios and feeling less wealthy. Even the billionaires. Bloomberg reported yesterday (March 10) that the billionaires who attended President Trump\u2019s inauguration have lost $210 billon collectively over the last seven weeks.
\nThat detail aside, the data emphasizes that you can\u2019t judge a paycheck-to-paycheck consumer by its cover. High earners who have structured their lifestyles around their full income with minimal savings could face similar challenges to lower-income households when economic conditions tighten.
\nThe impact of economic uncertainty will be felt across the spectrum, with similar outcomes despite very different income and paycheck-to-paycheck starting points.
\nAs Gaber said in his article back in May 2016, it\u2019s about choices. It isn\u2019t just how much money comes in, but the set of choices, obligations and priorities that determine where it goes.
\nIn an economy increasingly characterized by unpredictability, understanding this nuanced reality isn\u2019t just navel gazing. It also isn\u2019t distorting the definition of paycheck to paycheck or its importance in understanding how consumers manage spending. It\u2019s essential for understanding how consumers will react to financial pressures, and how vulnerable large swaths of the American consumer may be.
\nThe economy\u2019s resilience depends on their ability, in mass, to spend the paychecks they have \u2014 and knowing they\u2019ll keep getting them.
\nThe post Who Is the Paycheck-to-Paycheck Consumer in America? appeared first on PYMNTS.com.
\n", "content_text": "A six-figure income, a house in a nice neighborhood, two cars in the garage and kids in private schools \u2014 yet still feeling panicked when an emergency expense hits. And while the Fed once held out $400 as the average emergency expense threshold, that unexpected expense is now more likely to be about three times as much.\nFor millions of Americans, this isn\u2019t a hypothetical \u2014 it\u2019s their reality.\nToday, some 67% of Americans say they live paycheck to paycheck, according to a recent PYMNTS Intelligence study. The paycheck-to-paycheck lifestyle spans income brackets, education levels and professions. The every-other-week rhythm of waiting for the next paycheck has become America\u2019s most common financial heartbeat.\nRead More: Paycheck-to-\u200bPaycheck Ranks Swell as Rising Prices Erode Savings\nLiving paycheck to paycheck means consumers need their next paycheck to meet their monthly obligations. How much of a cash cushion they have is hugely important in determining how far consumers are willing to push their paychecks every month \u2014 and how stressed out they might be if faced with an unexpected financial shock.\nA possibility that could become more of a certainty as the latest news out of Washington is that President Trump declines to rule out the possibility of a recession in 2025\u00a0\u2014 and lots of analysts agree.\nNot Your Typical Paycheck-to-Paycheck Consumer\nFor me, the paycheck-to-paycheck conversation was turned on its head about nine years ago.\nIn May 2016, I came across a cover story in The Atlantic titled \u201cThe Secret Shame of Middle Class Americans.\u201d The author, Neil Gaber, described his personal story of living paycheck to paycheck, despite a career as a successful writer, and \u2014 in his words \u2014 being \u201creasonably prosperous.\u201d\nAlthough he was \u201cnowhere near rich,\u201d he earned a \u201cmiddle to upper-middle income\u201d salary, lived in Manhattan and sent his two daughters to private school. Yet, he describes being unable to cobble together enough money to cover a $400 emergency expense without having to ask friends or family members, including his own grown daughters sometimes, to pitch in.\nHis 6156-word story wasn\u2019t intended to garner sympathy. It was intended to shed light on the paycheck-to-paycheck treadmill that he and his family \u2014 and, he contended, many middle-income Americans \u2014 were on.\nGaber described the emotional toll that his \u201cfinancial impotence\u201d took as he tried hard to shield the family from the many financial bumps in the road. \u00a0He admits that most of his financial issues were related to the lumpy nature of how he was paid: lump sum book advances that created tax issues and the need for disciplined financial management over several years as he completed his novels.\nThen there were unexpected ups and downs of life that delivered painful financial gotchas.\nSelling his co-op in Manhattan to reduce his monthly housing costs took two years, during which time he paid double housing costs; book deals took longer to finalize and writing gigs got axed. Saving money was a challenge. Credit cards helped stretch his income but came with revolving debt at high interest rates that only compounded the problem.\nBut mostly, Gaber said, his paycheck-to-paycheck lifestyle was his choice.\nHis choice to be a writer, and specifically a novelist, with the unpredictable income swings and caps inherent in that profession. His choice to live in New York rather than a cheaper place. His choice to pay for private school and college for his girls, their weddings and childcare as they grew up.\nGaber said that his paycheck-to-paycheck lifestyle wasn\u2019t the result of living \u201can extravagant lifestyle\u201d but something more fundamental: too little income, too many expenses in the choices he and his wife made. And those choices had consequences over time, including an inability to save as much as he needed or wanted to.\nHis story stuck with me, mostly because it was antithetical to the stereotypical paycheck-to-paycheck persona: poor, uneducated, unemployed, with few future prospects.\nAnd Gaber\u2019s claim that more middle-class Americans fit that definition than were willing to admit it.\nUnpacking the Paycheck Economy\nIn March of 2020, the PYMNTS Intelligence team began to benchmark the paycheck-to-paycheck status of Americans as part of our monthly consumer studies related to COVID, the digital shift and how people spent and saved their money.\nIt seemed\u00a0 like a good time to gather and benchmark intelligence about how consumers would spend and save their income.\nThe U.S. was entering a once-in-a-hundred-year global pandemic, a period of instability and uncertainty. Documenting all the puts and takes would offer important insights for businesses, startups and investors. To our knowledge, this effort is the largest dataset documenting the shift to digital and the related spending and payments behaviors over that period \u2014 and those studies continue to this day.\nTo capture the paycheck-to-paycheck sentiment, we asked U.S. consumers to self-report their financial lifestyle against whether they need their next paycheck to meet their monthly financial obligations. And if they say they do, whether they can do that comfortably or whether they will struggle to make all payments on time.\nOur results over this five-year period are remarkably consistent with the personal story Gaber recounted in May 2016.\nThey suggest that the American consumer\u2019s relationship with money goes well beyond simple income calculations. It speaks to their values, priorities and the complex balancing act between choice and necessity that shapes those personal financial decisions.\nWho is the Paycheck-to-Paycheck Consumer?\nLike Gaber\u2019s account in 2016, the American consumer\u2019s paycheck-to-paycheck status is shaped by financial obligations and lifecycle, not just income. It is often based on the choices people make about how they align their expenses to their paychecks.\nIt\u2019s not about being \u201cpoor.\u201d And alternatively, not living paycheck to paycheck isn\u2019t about being \u201crich\u201d \u2014 even though most people prefer to define it in those stark terms.\nIt isn\u2019t even about whether consumers save or don\u2019t. In fact, 4% of people living paycheck to paycheck and who report having issues paying their monthly bills and 5% of those say they live paycheck to paycheck without issues say that savings and investments are part of how they allocate their monthly income.\nInstead, we find that paycheck-to-paycheck living spans all income levels, including half of high earners (defined as those earning $100,000 or more each year) as of January 2025. Across all income groups, people report similar abilities to pay their monthly bills without a struggle but needing the next paycheck to stay on track. This implies that living paycheck to paycheck isn\u2019t solely about financial hardship or an inability to meet basic needs, but how people choose to manage their monthly income.\nHere\u2019s an example.\nIn November 2024, high-income individuals (those earning $100,000+ annually) constituted a larger portion of struggling paycheck-to-paycheck consumers than middle-income earners. At the same time, from January to April 2023, nearly 25% of lower-income individuals reported not living paycheck to paycheck, a figure that declined to just 16% by January 2025.\nConversely, the proportion of higher-income people not living paycheck to paycheck increased slightly, though with significant fluctuations throughout this period. This disparity between lower-, middle- and higher-income groups indicates either similar cost pressures across income levels or potentially different spending choices among higher earners.\n\n\nThat suggests that paycheck-to-paycheck living is a continuum between choice and necessity. This choice-necessity framework provides a unique lens for understanding the dynamic nature of paycheck-to-paycheck behaviors.\nOur research reveals that 21% of American consumers (37 million) live paycheck to paycheck primarily out of necessity \u2014 there is a significant mismatch between money in and money out every month. More than half \u2014 54%,or some 93 million consumers \u2014 do so due to a blend of choices about how they spend their paychecks and circumstances that create unexpected financial events. And 25% live this way predominantly by choice.\nHigher earners cite family support obligations (such as kids at home and their attendant expenses), debt payments and higher spending on discretionary items \u2014 food out, vacations, clothes \u2014 for living paycheck to paycheck by choice. Lower-income earners point to wages that are insufficient to cover the rising costs of basics like housing and food for living paycheck to paycheck out of necessity.\nA quarter of middle-income paycheck-to-paycheck consumers live this way by choice, unforced by necessity. Like their higher-income counterparts, their decisions, by default, become necessities as they have defined them. Sending their kids to private school, like Gaber did, was a choice, but one that he and his wife considered a necessity.\nBy contrast, over half of lower-income paycheck-to-paycheck consumers report necessity as their primary driver, because so much of their paycheck is allocated to paying for basic essentials.\nNotably, the proportion of low-income consumers living paycheck to paycheck by choice has increased 5% since 2023, while necessity-driven cases rose 3%, indicating a growing polarization in how lower income consumers now manage their income to expense ratio every month.\nAlthough these lower-income individuals are more likely to be living paycheck to paycheck by necessity, almost 1 in 4 are living this way by choice. The choice-driven group tends to be younger (Gen Z or millennials), and they are more likely to have children.\nWhether consumers are driven by choice or necessity varies by income and generation, and by how much money they have in the bank.\nPeople who live paycheck to paycheck by choice have about $1,400 more in savings than those living paycheck by necessity. And, although inadequate savings correlate with financial hardship for some, others maintain substantial savings, yet still spend most of their income each pay period.\n\n\nChoice versus necessity determines how consumers spend their paychecks every month. Regardless of how consumers define their paycheck-to-paycheck status, everyone allocates some of their income to the basics \u2014 housing and groceries.\u00a0However (and not surprisingly), consumers whose paycheck-to-paycheck lifestyle is shaped more by more choice than necessity allocate more of their income to discretionary expenses.\nMore than two-thirds of those consumers chose to spend money on social activities at least once a month in the past year, compared to 43% of those who live paycheck to paycheck out of necessity. Consumers who live paycheck to paycheck out of necessity are half as likely to be planning to spend on leisure, entertainment and recreational activities because they lack the cash to spend on discretionary items.\n\n\nHow paycheck-to-paycheck consumers use credit cards varies. We know that\u00a090.5% of American consumers who want credit cards have and use them. According to the latest Federal Reserve data, American consumers have more than $1.4 trillion in credit card outstandings. Consumers have always used credit to leverage their spending power, and consumers across all paycheck-to-paycheck personas use it for that reason.\nConsumers living paycheck to paycheck either by choice or necessity have higher credit card balances than those who say they don\u2019t \u2014 and obviously for different reasons. Those who say they struggle with meeting their monthly financial obligations are much more likely to revolve their balances, using credit to fill in the gaps between paychecks or to ride the storm when unexpected expenses arise.\nA third more consumers who report struggling to meet their monthly obligations say they always revolve their credit card balances than those who say they comfortably pay their bills each month. The share of struggling paycheck-to-paycheck consumers who usually or always revolve their credit card balances has risen 7.4 percentage points since 2023.\n\n\nSavings tips the balance of the paycheck-to-paycheck lifestyle. Having cash savings significantly changes how people view their financial situation and how they save or spend accordingly. Living paycheck to paycheck \u2014 or not \u2014 is also influenced by how confident people are about the adequacy of their cash cushions if something goes haywire.\nDuring COVID-19, fewer American consumers reported living paycheck to paycheck despite higher unemployment. This unexpected trend occurred because stimulus checks and enhanced unemployment benefits provided many households with unprecedented cash reserves. Between 2021-2023, the percentage of Americans reporting paycheck-to-paycheck living dropped to 54.5% as debts decreased and savings grew.\nHaving savings doesn\u2019t automatically change whether people still think of themselves as living paycheck to paycheck, but it\u2019s an important factor, especially for those living paycheck to paycheck by choice.\nWe find that just over 40% of people with $2,500 to $5,000 in savings still choose to live paycheck to paycheck. Those with less than $1,000 in income are both more likely to live paycheck to paycheck and more likely to do so by necessity. And with $1,000 to $5,000 in savings, they \u00a0feel they have some security but are more nervous, and an emergency expense of $1,200 might be enough to tip those scales.\nThe data also reveals a significant decline in self-reported paycheck-to-paycheck status once savings exceed $5,000. Those who continue identifying as paycheck to paycheck despite having over $5,000 saved appear to do so by choice rather than necessity, as they report comfort with their bill-paying ability including spending on discretionary items, while maintaining a safety net for unexpected expenses.\n\n\nThe largest generational cohort of consumers who report living paycheck to paycheck out of necessity are single millennials, many of whom live in rural locations. A third of those millennials have dependent children living at home \u2014 spending is about providing for their families, with little room for much else.\nThe $45,000 Paycheck-to-Paycheck Tipping Point\nAnalyzing five years of PYMNTS Intelligence data reveals two critical income thresholds in describing the financial lifestyle of consumers.\nThe data finds that the first significant threshold occurs at $45,000-$49,999, when individuals begin to shift from struggling paycheck-to-paycheck living to a more comfortable paycheck-to-paycheck lifestyle.\nThe second critical threshold appears in the $125,000-$149,999 range, where people become increasingly likely to say they no longer live paycheck to paycheck either by choice or necessity.\nAs income climbs to more than $85,000 per year the incidence of living paycheck to paycheck by choice begins to decline as more and more consumers indicate they no longer live paycheck to paycheck at all. What\u2019s particularly interesting is that this shift is not universal, and many individuals with moderate to high incomes continue living paycheck to paycheck despite having the financial capacity to do otherwise. They\u2019re comfortable paying bills but still spend most of their income monthly because of their monthly income and savings backstop.\nSince these individuals can pay their bills comfortably, their continued paycheck-to-paycheck status suggests deliberate spending choices on more or more expensive things, rather than pure income constraints. These choices might include supporting dependents, purchasing larger homes or even second homes, or using private schools.\nIf paycheck-to-paycheck status were solely dictated by income necessity, we would expect to see a much steeper decline in all paycheck categories as income increases. However, the gradual nature of this decline suggests other factors at play, including the fact that consumers with incomes over $250,000 are 30% more likely to continue to live paycheck to paycheck (generally by choice).\nThe key insight is that even as financial capacity increases with higher incomes, many individuals continue to choose to live paycheck to paycheck rather than transitioning to non-paycheck-to-paycheck status.\nWhy Paycheck-to-Paycheck Status Matters Right Now \nIt\u2019s been 15 years since the U.S. experienced a great recession, even though there was a slight dip in 2020 owing to the COVID shutdown. Today\u2019s environment of economic uncertainty and rising prices, the threat of tariffs and the current administration\u2019s hints at a likely recession have significant implications for all consumers and how they will spend their paychecks in the weeks and months ahead.\nConsumers across all income brackets are likely to pull back on spending, but for different reasons. Those with savings cushions may voluntarily push pause on spending until they have more certainty in order to preserve cash and income, while those without financial shock absorbers in the form of savings will be forced to cut back out of necessity.\nThe \u201ccomfortable paycheck-to-paycheck\u201d group faces particular vulnerability as economic pressures mount. The Fed is unlikely to lower interest rates in the foreseeable future, and if there is inflation because of tariffs, rates might go even higher. That\u2019s bad news for consumers with adjustable mortgage rates that are set to rollover from historically low levels around 3% \u2014 just as interest rates on their credit cards and other loans rise. That means new monthly paycheck pressures owing to the increased cost of housing and credit card debt, especially if wages don\u2019t keep pace.\nAs basic goods become more expensive due to tariffs and rising production costs, these consumers could also see their discretionary income significantly reduced.\nPYMNTS Intelligence finds that more than half of consumers surveyed in February 2025 who are knowledgeable about the proposed tariffs said their wallets would take a beating; 78% said because of higher prices, and 75% because of product shortages. Many who were previously managing comfortably may find themselves sliding into the \u201cstruggling paycheck-to-paycheck\u201d category as more of their paychecks are allocated to the basics whose monthly costs continue to rise.\nRead more: What American Consumers and Small Businesses Think About Tariffs\nThat, of course, assumes consumers have a paycheck.\nThe Paycheck Economy\nThe labor market is starting to soften \u2014 and not because of the government layoffs, which impact a relatively small part of the American workforce overall. As businesses face their own uncertainty, they will likely freeze hiring, expenses and investments to grow the business. The ripple effect of this uncertainty itself is its own force.\nAs more consumers shift from choice-based financial decisions to those driven by necessity, overall consumption could contract, challenging economic growth. Retailers and service providers may need to adjust their strategies to address a growing segment of more price-sensitive consumers across income brackets if they hope to make a sale. Even wealthy consumers who don\u2019t live paycheck to paycheck may pull back after looking at their stock portfolios and feeling less wealthy. Even the billionaires. Bloomberg reported yesterday (March 10) that the billionaires who attended President Trump\u2019s inauguration have lost $210 billon collectively over the last seven weeks.\nThat detail aside, the data emphasizes that you can\u2019t judge a paycheck-to-paycheck consumer by its cover. High earners who have structured their lifestyles around their full income with minimal savings could face similar challenges to lower-income households when economic conditions tighten.\nThe impact of economic uncertainty will be felt across the spectrum, with similar outcomes despite very different income and paycheck-to-paycheck starting points.\nAs Gaber said in his article back in May 2016, it\u2019s about choices. It isn\u2019t just how much money comes in, but the set of choices, obligations and priorities that determine where it goes.\nIn an economy increasingly characterized by unpredictability, understanding this nuanced reality isn\u2019t just navel gazing. It also isn\u2019t distorting the definition of paycheck to paycheck or its importance in understanding how consumers manage spending. It\u2019s essential for understanding how consumers will react to financial pressures, and how vulnerable large swaths of the American consumer may be.\nThe economy\u2019s resilience depends on their ability, in mass, to spend the paychecks they have \u2014 and knowing they\u2019ll keep getting them.\nThe post Who Is the Paycheck-to-Paycheck Consumer in America? appeared first on PYMNTS.com.", "date_published": "2025-03-11T07:00:01-04:00", "date_modified": "2025-03-11T16:37:20-04:00", "authors": [ { "name": "Karen Webster", "url": "https://www.pymnts.com/author/karen-webster/", "avatar": "https://secure.gravatar.com/avatar/5b27788b9b2e77749b3dc9da766486d8?s=512&d=blank&r=g" } ], "author": { "name": "Karen Webster", "url": "https://www.pymnts.com/author/karen-webster/", "avatar": "https://secure.gravatar.com/avatar/5b27788b9b2e77749b3dc9da766486d8?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2025/03/Screenshot-174.png", "tags": [ "Consumer Finance", "consumer insight", "Consumer Spending", "credit", "economy", "inflation", "Karen Webster", "KLW Commentary", "Main Feature", "News", "paycheck-to-paycheck", "PYMNTS Intelligence", "PYMNTS News", "tariffs" ] }, { "id": "https://www.pymnts.com/?p=2509789", "url": "https://www.pymnts.com/consumer-finance/2025/ny-fed-consumers-feeling-gloomier-about-financial-futures/", "title": "NY Fed: Consumers Feeling Gloomier About Financial Futures", "content_html": "New data shows growing financial pessimism among Americans, the latest sign of shaky consumer confidence.
\nThe February installment of the Federal Reserve Bank of New York\u2019s Survey of Consumer Expectations, released Monday (March 10), shows that while households\u2019 medium and long-term inflation expectations were unchanged, consumers were less optimistic about their future financial situations.
\nAccording to the bank\u2019s Center for Macroeconomic Data, this was accompanied by marked declines in expectations about unemployment, delinquency and credit access.
\n\u201cPerceptions about households\u2019 current financial situations compared to a year ago were mostly unchanged, but year-ahead expectations about households\u2019 financial situations deteriorated considerably,\u201d the NY Fed said in a news release.
\n\u201cThe share of households expecting a worse financial situation in one year from now rose to 27.4%, the highest level since November 2023.\u201d
\nFor example, the research found that the average perceived probability of missing a minimum debt payment in the next three months rose by 1.3 percentage points to 14.6%, the highest level in nearly five years. This increase was driven by Americans without a college degree, and was largest among consumers under 40.
\nThe research also found that a larger portion of households say that accessing credit has grown more difficult, while a smaller share said getting credit is easier.\u00a0
\n\u201cExpectations for future credit availability deteriorated considerably in February, with the share of respondents expecting it will be harder to obtain credit a year from now increasing to 46.7% from 35.6%,\u201d the release said. \u201cThis reading is the highest since June 2024.\u201d
\nThe report comes two weeks after The Conference Board released its February Consumer Confidence Index, showing the largest monthly drop since August 2021.
\nAlthough consumers\u2019 view of present business conditions improved, their expectations on current labor market conditions, future business conditions, future income and future employment prospects all deteriorated, the research found.
\n\u201cReferences to inflation and prices in general continue to rank high in write-in responses, but the focus shifted towards other topics,\u201d Stephanie Guichard, senior economist, global indicators at The Conference Board, said in a news release. \u201cThere was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current Administration and its policies dominated the responses.\u201d
\nAlso Monday, a trio of banking regulators \u2014 the Federal Reserve Board, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency \u2014 released findings showing weakening credit quality among borrowers who owe more than $100 million.
\nAs covered here, the regulators attributed the weakened credit quality trends to \u201cthe pressure of high interest rates on leveraged borrowers and the compressed operating margins in some industry sectors.\u201d
\n\n
The post NY Fed: Consumers Feeling Gloomier About Financial Futures appeared first on PYMNTS.com.
\n", "content_text": "New data shows growing financial pessimism among Americans, the latest sign of shaky consumer confidence.\nThe February installment of the Federal Reserve Bank of New York\u2019s Survey of Consumer Expectations, released Monday (March 10), shows that while households\u2019 medium and long-term inflation expectations were unchanged, consumers were less optimistic about their future financial situations.\nAccording to the bank\u2019s Center for Macroeconomic Data, this was accompanied by marked declines in expectations about unemployment, delinquency and credit access.\n\u201cPerceptions about households\u2019 current financial situations compared to a year ago were mostly unchanged, but year-ahead expectations about households\u2019 financial situations deteriorated considerably,\u201d the NY Fed said in a news release.\n\u201cThe share of households expecting a worse financial situation in one year from now rose to 27.4%, the highest level since November 2023.\u201d\nFor example, the research found that the average perceived probability of missing a minimum debt payment in the next three months rose by 1.3 percentage points to 14.6%, the highest level in nearly five years. This increase was driven by Americans without a college degree, and was largest among consumers under 40.\nThe research also found that a larger portion of households say that accessing credit has grown more difficult, while a smaller share said getting credit is easier.\u00a0\n\u201cExpectations for future credit availability deteriorated considerably in February, with the share of respondents expecting it will be harder to obtain credit a year from now increasing to 46.7% from 35.6%,\u201d the release said. \u201cThis reading is the highest since June 2024.\u201d\nThe report comes two weeks after The Conference Board released its February Consumer Confidence Index, showing the largest monthly drop since August 2021.\nAlthough consumers\u2019 view of present business conditions improved, their expectations on current labor market conditions, future business conditions, future income and future employment prospects all deteriorated, the research found.\n\u201cReferences to inflation and prices in general continue to rank high in write-in responses, but the focus shifted towards other topics,\u201d Stephanie Guichard, senior economist, global indicators at The Conference Board, said in a news release. \u201cThere was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current Administration and its policies dominated the responses.\u201d\nAlso Monday, a trio of banking regulators \u2014 the Federal Reserve Board, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency \u2014 released findings showing weakening credit quality among borrowers who owe more than $100 million.\nAs covered here, the regulators attributed the weakened credit quality trends to \u201cthe pressure of high interest rates on leveraged borrowers and the compressed operating margins in some industry sectors.\u201d\n \nThe post NY Fed: Consumers Feeling Gloomier About Financial Futures appeared first on PYMNTS.com.", "date_published": "2025-03-11T06:51:25-04:00", "date_modified": "2025-03-11T06:51:25-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/10/auto-loans-earnings-banks.jpg", "tags": [ "Consumer Finance", "Consumer Spending", "credit", "credit access", "federal reserve", "Federal Reserve Bank of New York", "inflation", "News", "PYMNTS News", "unemployment", "What's Hot" ] }, { "id": "https://www.pymnts.com/?p=2509647", "url": "https://www.pymnts.com/consumer-finance/2025/will-macro-pressures-and-fico-creep-be-a-boon-for-pay-later-options/", "title": "Will Macro Pressures and \u2018FICO Creep\u2019 Be a Boon for Pay Later Options?", "content_html": "Monday (March 10) marked another bloodletting on Wall Street, another slew of headlines about tariffs and trade wars. And as economic concerns mount, the picture on consumer debt becomes cloudier.
\nPYMNTS reported recently that data from the Federal Reserve revealed overall credit increased $18.1 billion during the first month of the year. Revolving debt was up by $9 billion. Nonrevolving debt, which includes auto loans, was up by about $9 billion, as measured month over month \u2014 and that follows a massive $18.9 billion surge in December.
\nThe normalized pace still represents an \u201caddition\u201d to the overall monthly obligations.\u00a0
\nAs reported here last month, the Fed\u2019s latest data on delinquencies \u2014 with an eye on consolidated debt \u2014 showed gains at the end of last year, with 3.6% of outstanding debt in some stage of delinquency. As of the end of the fourth quarter, credit cards continued to be the loan type with the highest share of balance 90+ days delinquent, at 11.35%. This share grew 2% quarterly and 17% year over year.
\nWe may be headed into an age of \u201cFICO creep,\u201d where two things happen: The macroeconomic, exogenous shocks render the traditional tiers of credit scoring less reliable as a predictor of repayment behavior. And at the same time, there may be some slippage of those tiers, as super-prime consumers move toward prime status, prime consumers flirt with subprime status \u2026 you get the picture.\u00a0
\nAt the end of last year, Experian noted that the average FICO score was 715, and that may be fluid amid the pressures and uncertainty. Indeed, PYMNTS Intelligence has found that 19% of consumers surveyed have indicated that they had reached card limits at least once in the past year.
\nAnd in the Fed\u2019s latest survey of its district banks in the Beige Book, several respondents reported that consumer spending was declining and in some cases banks were pulling back on lending. The pressures are not coming from card loans. Earlier this month, Fitch Ratings said that the share of subprime auto borrowers who were at least 60 days delinquent on their payments climbed to 6.6%, a record level.
\nPYMNTS Intelligence indicated that among several credit profiles, there are about 63 million borrowers in the credit \u201cmarginalized\u201d population, the vast majority of those with FICO scores spanning the 750 and below threshold (and more than 50% below 650). Experian has said that about 30% of U.S. consumers have FICO scores below 650 and are thus subprime.\u00a0
\nIf \u2014 in an increasingly rocky macro environment, that would be \u201cwhen\u201d \u2014 banks tighten lending, and repayments are stretched, we\u2019d see that aforementioned creep.\u00a0 The credit marginalized populations would swell, and 29% of subprime, about 19% and 12.4% of super-prime consumers have already been denied at least on credit card application in the past year.
\n\u00a0Cash flow pressures would give tailwind to paying over time, especially with buy now, pay later (BNPL) options. BNPL is popular, particularly among consumers facing financial difficulties. According to PYMNTS Intelligence research accessible here, \u00a0consumers who frequently encounter cash flow problems are 3.5 times more likely to use BNPL, with 8.9% of these consumers using it in the past 30 days, compared to just 2.5% of those without the same pressures.
\nThe post Will Macro Pressures and \u2018FICO Creep\u2019 Be a Boon for Pay Later Options? appeared first on PYMNTS.com.
\n", "content_text": "Monday (March 10) marked another bloodletting on Wall Street, another slew of headlines about tariffs and trade wars. And as economic concerns mount, the picture on consumer debt becomes cloudier.\nPYMNTS reported recently that data from the Federal Reserve revealed overall credit increased $18.1 billion during the first month of the year. Revolving debt was up by $9 billion. Nonrevolving debt, which includes auto loans, was up by about $9 billion, as measured month over month \u2014 and that follows a massive $18.9 billion surge in December.\nThe normalized pace still represents an \u201caddition\u201d to the overall monthly obligations.\u00a0 \nAs reported here last month, the Fed\u2019s latest data on delinquencies \u2014 with an eye on consolidated debt \u2014 showed gains at the end of last year, with 3.6% of outstanding debt in some stage of delinquency. As of the end of the fourth quarter, credit cards continued to be the loan type with the highest share of balance 90+ days delinquent, at 11.35%. This share grew 2% quarterly and 17% year over year.\nLooking Toward FICO Creep\nWe may be headed into an age of \u201cFICO creep,\u201d where two things happen: The macroeconomic, exogenous shocks render the traditional tiers of credit scoring less reliable as a predictor of repayment behavior. And at the same time, there may be some slippage of those tiers, as super-prime consumers move toward prime status, prime consumers flirt with subprime status \u2026 you get the picture.\u00a0 \nAt the end of last year, Experian noted that the average FICO score was 715, and that may be fluid amid the pressures and uncertainty. Indeed, PYMNTS Intelligence has found that 19% of consumers surveyed have indicated that they had reached card limits at least once in the past year. \nAnd in the Fed\u2019s latest survey of its district banks in the Beige Book, several respondents reported that consumer spending was declining and in some cases banks were pulling back on lending. The pressures are not coming from card loans. Earlier this month, Fitch Ratings said that the share of subprime auto borrowers who were at least 60 days delinquent on their payments climbed to 6.6%, a record level.\nWho Benefits?\nPYMNTS Intelligence indicated that among several credit profiles, there are about 63 million borrowers in the credit \u201cmarginalized\u201d population, the vast majority of those with FICO scores spanning the 750 and below threshold (and more than 50% below 650). Experian has said that about 30% of U.S. consumers have FICO scores below 650 and are thus subprime.\u00a0 \nIf \u2014 in an increasingly rocky macro environment, that would be \u201cwhen\u201d \u2014 banks tighten lending, and repayments are stretched, we\u2019d see that aforementioned creep.\u00a0 The credit marginalized populations would swell, and 29% of subprime, about 19% and 12.4% of super-prime consumers have already been denied at least on credit card application in the past year.\n\u00a0Cash flow pressures would give tailwind to paying over time, especially with buy now, pay later (BNPL) options. BNPL is popular, particularly among consumers facing financial difficulties. According to PYMNTS Intelligence research accessible here, \u00a0consumers who frequently encounter cash flow problems are 3.5 times more likely to use BNPL, with 8.9% of these consumers using it in the past 30 days, compared to just 2.5% of those without the same pressures.\nThe post Will Macro Pressures and \u2018FICO Creep\u2019 Be a Boon for Pay Later Options? appeared first on PYMNTS.com.", "date_published": "2025-03-10T19:57:02-04:00", "date_modified": "2025-03-10T19:57:02-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2025/03/FICO-creep.jpg", "tags": [ "BNPL", "buy now pay later", "consumer credit", "Consumer Finance", "credit cards", "Experian", "FICO creep", "FICO scores", "News", "PYMNTS Intelligence", "PYMNTS News" ] } ] }