Finance
Many personal loan borrowers rely on loans for everyday expenses as cost of living grows
The third most common use of personal loans is for everyday expenses. (iStock)
The personal loan market is growing, in part due to the high cost of living. About 14.5% of borrowers use personal loans for everyday expenses, a MarketWatch Guides survey found.
The two more common reasons consumers use personal loans are debt consolidation and home improvements. Nearly 21.2% of personal loans are used to consolidate debt and 20.1% are used to make home improvements. Borrowers are dealing with increasing prices in every industry, from food to building materials to housing costs. To deal with the rising costs, these borrowers turn to personal loans.
“Families have already cut back on nonessentials, and there isn’t much left to take out of their budgets,” EJ Antoni, an economist with the public policy nonprofit Heritage Foundation said. “What little growth there is in consumer spending is being fueled by debt – and that’s unsustainable.”
The loans being taken out aren’t small — 35% of borrowers surveyed reported that their loans were between $10,000 and $50,000. Just 29% of borrowers have loans that are less than $2,499.
When it comes to personal loan shopping, Credible can do the heavy lifting for you. With the click of a button, you can view multiple lenders, rates, and terms in one spot.
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Household debt is up in all categories
At the end of last year, most consumer debts rose substantially. The Q4 household debt report released by the Federal Reserve Bank of New York found that mortgage debt rose by $112 billion while home equity lines of credit increased by $11 billion.
Credit card balances now stand at $1.13 trillion after increasing by $50 billion in Q4. Auto loan balances also increased into the trillions to $1.61 trillion.
“There are some consumers in the less-than-prime segments that have been accumulating debt at an accelerated pace, likely due to the rise in the cost of everyday items,” Experian’s Director of U.S. Economics Joseph Mayans said. “That may continue to cause strain in 2024, especially as the post-pandemic jobs boom that drove red-hot wage gains and easy job hopping for many lower-income workers comes to an end.”
The only debt measured in the survey that didn’t increase all that much was student loan debt. They increased by $2 billion and now stand at $1.6 trillion.
If you need help paying down your debt, a personal loan can consolidate your debts into one payment with lower interest. If you want to get a sense of what debt consolidation loan options are available to you, visit Credible to compare rates and lenders.
HIGH DEBT IS CAUSING MORE CONSUMERS TO LIVE PAYCHECK-TO-PAYCHECK
The cost of living is growing more challenging for many families
Certain states are facing a cost of living crisis, with many residents spending most of their income just on housing and utilities.
Half the residents of New York City lack the income to meet the basic cost of living, according to a United Way of New York report. In 2021, just 36% of households struggled to deal with the cost of living. Of those struggling, 79% of families spent more than 30% of their income on housing alone. The report also found that 30% of households in NYC received food assistance.
Californians also deal with high living costs compared to low incomes. A report from California’s Legislative Analyst’s Office (LAO) researched the effects of minimum wage on different sized households. A single parent with three kids will live right around the poverty level with a full-time job, but for a single parent with four kids, the minimum wage is below the poverty level.
Housing in California is particularly difficult to afford. Minimum-wage earning single parents with one child often can’t afford housing in all but three counties in California, the LAO report found. Even families with two minimum-wage workers pay more than half of their income in eight of California’s most popular coastal counties.
If you need a loan, personal loans with low interest rates are strong options. Use an online marketplace like Credible to make sure you’re getting the best personal loan rate and lender for your needs.
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Omar Marques | Sopa Images | Lightrocket | Getty Images
EToro, a stock brokerage platform that’s been ramping up in crypto, has priced its IPO at $52 a share, as the company prepares to test the market’s appetite for new offerings.
The company had planned to sell shares at $46 to $50 each.
IPOs looked poised for a rebound when President Donald Trump returned to the White House in January after a prolonged drought spurred by rising interest rates and inflationary concerns. CoreWeave’s March debut was a welcome sign for IPO hopefuls such as eToro, online lender Klarna and ticket reseller StubHub.
But tariff uncertainty temporarily stalled those plans. The retail trading platform filed for an initial public offering in March, but shelved plans as rising tariff uncertainty rattled markets. Klarna and StubHub did the same.
EToro’s Nasdaq debut, under ticker symbol ETOR, may indicate whether the public market is ready to take on risk. Digital physical therapy company Hinge Health has started its IPO roadshow, and said in a filing on Tuesday that it plans to raise up to $437 million in its upcoming offering. Also on Tuesday, fintech company Chime filed its prospectus with the SEC.
Founded in 2007 by brothers Yoni and Ronen Assia along with David Ring, eToro competes with the likes of Robinhood and makes money through fees related to trading, including spreads on buy and sell orders, and non-trading activities such as withdrawals and currency conversion.
Net income jumped almost thirteenfold last year to $192.4 million from $15.3 million a year earlier. The company has been ramping up its crypto business, with revenue from cryptoassets more than tripling to over $12 million in 2024. One-quarter of its net trading contribution last year came from crypto, up from 10% the prior year.
This isn’t eToro’s first attempt at going public. In 2022, the company scrapped plans to hit the market through a merger with a special purpose acquisition company (SPAC) during a sharp downturn in equity markets. The deal would have valued the company at more than $10 billion.
CEO Yoni Assia told CNBC early last year that eToro was still aiming for a market debut but “evaluating the right opportunity” as it was building relationships with exchanges, including the Nasdaq.
“We definitely are eyeing the public markets,” he said at the time. “I definitely see us becoming eventually a public company.”
EToro said in its prospectus that BlackRock had expressed interest in buying $100 million in shares at the IPO price. The company said it planned to sell 5 million shares in the offering, with existing investors and executives selling another 5 million.
Underwriters for the deal include Goldman Sachs, Jefferies and UBS.
— CNBC’s Ryan Browne contributed reporting
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