Are Credit Cards an Obstacle in Managing Finances?
A study has found that many Americans are looking for alternative payment options to traditional credit
- |
- Written by Banking Exchange staff
Nearly three quarters of Americans find credit cards make it more challenging to handle their personal finances, according to new research.
A study by OnePoll on behalf of fintech company Affirm found that 73% of Americans, of 2,000 surveyed, said using credit cards made budgeting more difficult.
Instead, respondents were looking into more flexible payment options such as ‘buy now, pay later’ services. Nearly half of respondents (48%) stated that this approach made them feel most in control of their finances, compared to 41% that said the same for credit cards. Just 28% said cash payments made them feel more in control of finances.
While nearly a third (64%) felt “in control of their finances”, the research found, nearly four in five (79%) said they could be doing a better job managing them. The average person reported spending $350 over their budget in the past six months.
Despite this, Americans appear to be saving more. This was the most popular approach to improving personal finances among the respondents, with 68%, and comes after data from the Bureau of Economic Analysis showed that the US personal savings rate reached 4.3% in June, up from a 15-year low of 2.7% a year earlier.
This increase in saving has led to more than three in four (76%) Americans reporting that they feel prepared for a potential recession.
Libor Michalek, president of Affirm, said: “The reality is that the average American has three credit cards and nearly $6,000 in revolving credit card debt, while financial institutions collect billions in late fees each year. That is a lot of money coming from consumers’ pockets when they need it most.”
A separate study by TD Bank has found four out of five people have had their spending habits impacted by inflation. The survey, which polled over 1,000 Americans, found 57% had turned to discounts and promotions and 53% to lower-priced options to combat inflation.
More than a third (39%) of respondents cut their discretionary budget in response to the rising cost of living, and 27% have had to dip into their savings.
Year-on-year CPI inflation was 3.2% in July, having come down significantly from a peak of 9.1% in June 2022.
Tagged under Payments, Lines of Business, Financial Trends, Retail Banking, Feature3, Feature, Cards,