Consumers living paycheck to paycheck who were keeping up with their bills grew less confident as recently as last month that they could manage their debt over the next year. Higher regular expenses and expenses that exceeded income were the two most common reasons cardholders gave for paying their balances in full less often.
Among consumers living paycheck to paycheck who were paying their bills without difficulty, 61.1% said in October that they were confident they could manage their existing debt over the next 12 months. That was down from 71.2% in September and the lowest reading for the group since PYMNTS Intelligence began tracking it. The group accounted for about 4 in 10 consumers in the study.
The decline in confidence followed a quarter in which credit card balances increased by $22 billion to $1.29 trillion, according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit, released Tuesday (Nov. 10). The shares of card balances newly moving into early or serious delinquency edged down. Across all household debt, which reached $19.1 trillion, the share already in some stage of delinquency rose to 5% from 4.7%, and the share moving into early delinquency rose for mortgages and auto loans.
The Fed’s credit records cover the quarter through September. The PYMNTS Intelligence survey, fielded Oct. 1–13 among 2,087 U.S. consumers, asked how people expected to manage debts they already owed. Confidence rose two percentage points to 42.8% among consumers living paycheck to paycheck who were struggling to pay their bills, though it remained the lowest of the three groups surveyed. The steepest drop came among those who said they could still cover their bills.
Of the $334 billion increase in household debt, $257 billion came from mortgages, per the official data released Tuesday. The Fed attributed about half of that mortgage increase to balances reappearing after a reporting gap in the second quarter. Auto loan balances increased $21 billion. Card issuers’ aggregate credit limits rose $115 billion, increasing the total amount cardholders were authorized to borrow.
The Difference Between Paying and Paying in Full
A cardholder who pays at least the minimum by the due date can remain current while carrying a balance. In the October survey, 20% of cardholders said they were paying in full less often than a year earlier, and 20.2% said they were doing so more often. Among cardholders living paycheck to paycheck and struggling to pay bills, 40.7% reported paying in full less often. Among those who did not live paycheck to paycheck, 4.5% reported the same change.
Among cardholders paying in full less often, 29.6% named higher regular expenses as the main reason, and 27.5% said those expenses exceeded their income. Another 13.2% said they were keeping more cash on hand, and 9.2% cited a large unexpected expense. Paying less than the full balance can preserve cash for the next round of bills. For more than half of those paying in full less often, the reason they gave was tied to expenses that recur.
A September PYMNTS Intelligence report, based on a July survey, found that how often consumers carried card balances varied with their ability to cut essential spending. Among cardholders who had suffered a financial setback and said they had no room to reduce essential expenses, 34% said they never paid their balances in full. The share was 8% among those who had room to cut essential costs and had done so.
In a separate analysis published Tuesday, New York Fed researchers found that the gap in new serious card delinquencies between lower- and higher-income ZIP codes had widened since 2022. They grouped borrowers by their ZIP code’s average adjusted gross income. Cards issued from 2020 through 2022 accounted for a sizable share of card balances that became at least 90 days past due in 2023 and into 2024. During the pandemic, a larger share of new cards went to borrowers in the lowest-income ZIP codes, and the median credit score at issuance fell from 699 in 2017–19 to 688 in 2020–22.
For card issuers, an on-time payment can reflect very different household budgets. One cardholder pays in full, another carries a balance to keep cash on hand, and a third makes the required payment even as regular expenses exceed income. The Fed’s quarterly figures show how much debt is overdue. The October PYMNTS Intelligence survey shows how much confidence can fall among consumers who are still keeping up.
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