Struggling Households & Credit for Essentials | Stats & Insights
- A new report suggests that financial stability, rather than just income level, is the key factor in determining how consumers use credit.
- The report, based on a survey of more than 2,200 consumers, divided respondents into three groups: those not living paycheck to paycheck, those living paycheck to paycheck comfortably,...
- The research found that while financially secure individuals often use credit to maximize rewards, those facing financial hardship rely on it to cover essential expenses. This underscores the...
Financial stability,not just income,dictates consumer credit usage. This new report reveals crucial insights: 43% of struggling paycheck-to-paycheck users rely on credit for essentials. While the financially secure utilize credit for rewards, those facing hardship leverage it for groceries and healthcare. Explore how financial lifestyle influences credit needs, amounts spent, and product choices like overdrafts and payday loans. news Directory 3 keeps you informed. This study underscores a significant shift in consumer behavior, prompting financial institutions to realign offerings based on diverse consumer needs, notably consumer credit options. Discover what’s next…
Financial Stability, Not Income, Drives Consumer Credit Reliance
Updated June 18, 2025
A new report suggests that financial stability, rather than just income level, is the key factor in determining how consumers use credit. The analysis challenges the conventional wisdom about consumer credit reliance, finding that people’s financial lifestyles dictate whether they use credit for necessities or rewards.
The report, based on a survey of more than 2,200 consumers, divided respondents into three groups: those not living paycheck to paycheck, those living paycheck to paycheck comfortably, and those living paycheck to paycheck and struggling to pay bills. The study revealed significant differences in how each group uses credit.
The research found that while financially secure individuals often use credit to maximize rewards, those facing financial hardship rely on it to cover essential expenses. This underscores the importance of understanding the unique needs and behaviors of consumers struggling to make ends meet.
The study also indicated that financial lifestyle influences not only the need for credit but also the amount spent using credit and the types of credit products chosen.
- About 43% of credit users living paycheck to paycheck and struggling to pay bills said they coudl not afford essential expenses without credit. That’s eight times the rate of those not living paycheck to paycheck.This group was also six times more likely to need credit for nonessential purchases.
- Consumers in financial distress used credit for a smaller percentage of their total spending compared to more financially stable individuals: 41% for essentials and 43% for nonessentials. In contrast, those not living paycheck to paycheck used credit for 56% of essential and 63% of nonessential expenses.
- Those struggling to make ends meet relied more on alternative credit products such as overdrafts, personal loans, and payday loans.They used thes sources for 31% of essential expenses purchased with credit, triple the rate of those not living paycheck to paycheck.
The report also examined which essential expenses are most frequently covered by credit, highlighting groceries and out-of-pocket health care costs. Demographic differences were also noted, with certain generations, marital statuses, and employment situations being disproportionately represented among those living paycheck to paycheck and struggling.
What’s next
Financial institutions can use these insights to better tailor their products and services to meet the diverse needs of consumers across the financial spectrum, especially regarding consumer credit options.