Inflation starts taking a back seat to other household debt and credit concerns, Achieve survey finds

SAN MATEO, Calif., Aug. 5, 2024 – While inflation remains a lingering challenge for consumers as they strive to make ends meet and pay their bills on time, other financial challenges are starting to become a more pressing concern, according to the results of a new study by Achieve, the leader in digital personal finance.

Achieve’s think tank, the Achieve Center for Consumer Insights, surveyed 2,000 consumers with active accounts across categories of consumer debt, including credit cards, mortgages and home equity lines of credit, and auto and student loans. The survey format and respondent panel are designed to complement the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit by providing qualitative insights into consumer borrowing trends. To further examine the causes and ramifications of rising loan delinquencies, the survey panel included a subset of borrowers who were 30 days or more past due on their payments at least once during the past six months.

Inflation’s impact lessens

Job loss or reduced income was the leading reason consumers said they have recently fallen behind on their bills, with 18% of respondents citing this as the primary reason they missed a payment on a debt account. Meanwhile, the share of consumers who cited inflation as the primary reason they missed a payment on one of their debt accounts fell by more than half in the third quarter, to 10%, compared to 21% during the second quarter.

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

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

57% of consumers rely on credit cards to get by

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

During the third quarter, 36% of consumers said it is very difficult or difficult for them to pay their recurring debts on time, a slight increase from 31% in the second quarter. Among these respondents, 64% said paying their debts on time is challenging because they don’t make enough money to cover their spending. Almost a third (32%) said having too many accounts to repay contributes to their debt challenges, down from 39% last quarter. The share of respondents who said timing cashflow between receiving income and payment due dates was identical in the second and third quarters, at 27%. Meanwhile, 16% said they have difficulty tracking how much they owe across their accounts, up slightly from 14% last quarter.

“Households that find themselves relying heavily on credit cards to pay for basic necessities often get caught up in a cycle of indebtedness that they cannot get out of,” Housser said.

Economic optimism is growing

Consumer sentiment about how their financial situation has evolved over the past three years is mixed, with a nearly even share of respondents saying their situation has improved (37%) and worsened (36%). But expectations for the future are much stronger, with most consumers expecting their financial circumstances to improve in both the short and long term. Over the next year, 56% of consumers expect their finances will improve, with that rate growing to 64% when asked about their outlook three years from now.

Methodology

The data and findings presented are based on an Achieve survey conducted in June 2024 consisting of 2,000 U.S. consumers ages 18 and older with an active account for one or more of the following categories of consumer debt: auto loan; major credit card with a minimum outstanding balance of $100; first-lien mortgage; home equity line of credit (HELOC); student loan; and other (unsecured personal loan, store-branded credit card, buy now, pay later loan, or closed-end home equity loan). The sample was augmented to include a statistically significant subset of credit card, auto loan and student loan borrowers who have been 30 days or more past due at least once in the past six months.

About the Achieve Center for Consumer Insights

The Achieve Center for Consumer Insights is a think tank that leverages Achieve’s team of digital personal finance experts to provide a view into the state of consumer finances. In addition to sharing insights gleaned from Achieve’s proprietary data and analytics, the Achieve Center for Consumer Insights publishes in-depth research, bespoke data and thoughtful commentary in support of Achieve’s mission of helping everyday people get on the path to a better financial future.

About Achieve

Achieve, THE digital personal finance company, helps everyday people get on, and stay on, the path to a better financial future. Achieve pairs proprietary data and analytics with personalized support to offer personal loans, home equity loans, debt resolution and debt consolidation, along with financial tips, education and Achieve MoLO (Money Left Over), a free mobile budgeting app. Achieve has 2,500 dedicated teammates across the country with hubs in Arizona, California, Florida and Texas. Achieve is frequently recognized as a Best Place to Work.

Achieve refers to the global organization and may denote one or more affiliates of Achieve Company, including Achieve.com (NMLS ID #138464); Achieve Home Loans, Equal Housing Lender (NMLS ID #1810501); Achieve Personal Loans (NMLS ID #227977); Achieve Resolution (NMLS ID # 1248929) and Freedom Financial Asset Management (CRD #170229).