Finance

Americans tap into savings as they struggle with inflation: survey

Published

1 year ago

April 9, 2024

Business Finance News

DO NOT USE ON FNC/FBN DIGITAL EDITORIAL. ONLY FOR CREDIBLE CONTENT

Americans can’t save because they struggle to meet basic spending needs. (iStock)

Americans are borrowing from their savings or taking other measures to make ends meet under the pressure of inflation, a recent survey said.

More than a quarter (26.1%) of Americans have to withdraw money from savings – including retirement accounts – or sell off assets to meet basic spending needs, according to the Help Advisor survey. Moreover, 11.5% have had to tap family and friends to access capital for routine spending.

The survey said inflation and rising prices are reasons Americans tapped savings or resorted to other methods to cover basic spending needs. U.S. inflation is cooling some after hitting a 40-year high in 2022, but Americans are still dealing with rising gas costs, high food prices, and out-of-control housing costs.

More than half of Americans (55% of respondents) said in a recent Gallup survey they worried “a great deal” about inflation, with another 24% saying they worried “a fair amount.” In addition, 52% of Americans believe inflation is a bigger problem facing the US today than unemployment, immigration and crime.

“Post-COVID-19 inflation has taken a toll on Americans’ pocketbooks,” the HelpAdvisor survey said.

If you are struggling with high inflation, you could consider taking out a personal loan to pay down debt at a lower interest rate, reducing your monthly payments. Visit Credible to find your personalized interest rate without affecting your credit score.

SOCIAL SECURITY: COLA INCREASING BUT MEDICARE COSTS RISING TOO IN 2024

Housing inflation

High home prices and mortgage rates continue to crowd out many homebuyers as mortgage rates hover between 6.5% and 7%. While the Federal Reserve has said that the plan to reverse interest rate hikes is still in the works, the timeline for when those cuts will begin remains unclear. A reversal in interest rates is crucial in creating more affordability for buyers who are also dealing with record home price gains.

However, housing supply is improving, according to a recent Redfin report. New listings rose 13% from a year earlier nationwide during the four weeks ending March 3, the most significant increase in nearly three years.

Home prices have also lost some momentum. Roughly 5.5% of home sellers dropped their asking price, the highest share of any February since at least 2015, while the share of affordable homes on the market has increased, according to Redfin.

If you want to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.

MILLENNIALS ARE DESPERATE TO BUY A HOME, MOST WILLING TO PAY A MORTGAGE RATE ABOVE 7%: SURVEY

Interest rates stay higher for longer

The Fed responded to record-high inflation by aggressively raising the federal funds rate 11 times to a 23-year high of about 5.4%. This policy helped bring inflation down to 3.2% in February from a peak of 9.1% in June 2022.

While it is largely expected that the Fed will begin to dial back interest rates as inflation continues to moderate, the timeline on cuts is being pushed further into the distance to give inflation more time to reach a 2% target rate. Fed officials anticipate at least three rate cuts for 2024. Federal Reserve Chair Jerome Powell said that the central bank will continue to monitor inflation and other economic indicators to determine when to lower rates. Lowering them too soon would bring the risk of bringing inflation back while holding back too long poses a risk to economic growth, Powell explained.

“We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in a statement. “The economic outlook is uncertain, however, and we remain highly attentive to inflation risks. We are prepared to maintain the current target range for the federal funds rate for longer, if appropriate.”

If you’re worried about the state of the economy, you could consider paying down high-interest debt with a personal loan at a lower interest rate. Visit Credible to speak with a personal loan expert and get your questions answered.

THIS IS THE #1 CITY FOR FIRST-TIME HOMEBUYERS, AND OTHER HOT US HOUSING MARKETS

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Finance

More Americans buy groceries with buy now, pay later loans

Published

4 hours ago

April 26, 2025

Business Finance News

People shop for produce at a Walmart in Rosemead, California, on April 11, 2025.

Frederic J. Brown | Afp | Getty Images

A growing number of Americans are using buy now, pay later loans to buy groceries, and more people are paying those bills late, according to new Lending Tree data released Friday.

The figures are the latest indicator that some consumers are cracking under the pressure of an uncertain economy and are having trouble affording essentials such as groceries as they contend with persistent inflation, high interest rates and concerns around tariffs.

In a survey conducted April 2-3 of 2,000 U.S. consumers ages 18 to 79, around half reported having used buy now, pay later services. Of those consumers, 25% of respondents said they were using BNPL loans to buy groceries, up from 14% in 2024 and 21% in 2023, the firm said.

Meanwhile, 41% of respondents said they made a late payment on a BNPL loan in the past year, up from 34% in the year prior, the survey found.

Lending Tree’s chief consumer finance analyst, Matt Schulz, said that of those respondents who said they paid a BNPL bill late, most said it was by no more than a week or so.

“A lot of people are struggling and looking for ways to extend their budget,” Schulz said. “Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”

“For an awful lot of people, that’s going to mean leaning on buy now, pay later loans, for better or for worse,” he said.

He stopped short of calling the results a recession indicator but said conditions are expected to decline further before they get better.

“I do think it’s going to get worse, at least in the short term,” said Schulz. “I don’t know that there’s a whole lot of reason to expect these numbers to get better in the near term.”

The loans, which allow consumers to split up purchases into several smaller payments, are a popular alternative to credit cards because they often don’t charge interest. But consumers can see high fees if they pay late, and they can run into problems if they stack up multiple loans. In Lending Tree’s survey, 60% of BNPL users said they’ve had multiple loans at once, with nearly a fourth saying they have held three or more at once.

“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” said Schulz. “So people should tread lightly.”

Lending Tree’s findings come after Billboard revealed that about 60% of general admission Coachella attendees funded their concert tickets with buy now, pay later loans, sparking a debate on the state of the economy and how consumers are using debt to keep up their lifestyles. A recent announcement from DoorDash that it would begin accepting BNPL financing from Klarna for food deliveries led to widespread mockery and jokes that Americans were struggling so much that they were now being forced to finance cheeseburgers and burritos.

Over the last few years, consumers have held up relatively well, even in the face of persistent inflation and high interest rates, because the job market was strong and wage growth had kept up with inflation — at least for some workers.

Earlier this year, however, large companies including Walmart and Delta Airlines began warning that the dynamic had begun to shift and they were seeing cracks in demand, which was leading to worse-than-expected sales forecasts.