NEW DATA: More Americans Behind On Bills, But Feel More Financially Stable

When it comes to personal finances, it turns out that perception is not always reality.

One might expect that consumers in better financial standing would feel more optimistic about the future than consumers in worse financial standing. But data in the latest Financial Invisibles Report suggests the opposite may be true, especially when it comes to two of the four financial consumer personas examined: Shut Outs and Second Chances.

Shut Outs are “shut out” of the traditional financial system, meaning they have limited access to credit and related financial products due to poor or non-existent credit histories. Meanwhile, Second Chances are those who are getting a “second chance” at restoring their personal finances after delinquency. Second Chances are more educated and less likely than Shut Outs to live paycheck to paycheck.

However, Shut Outs feel more positive about their personal finances compared to Second Chances who are in better financial standing, according to data revealed  in the report, whereas 18 percent of Second Chances said they will likely fall behind on bills soon. So why would consumers on more solid financial footing feel more pessimistic about their financial futures?

According to our latest survey, the perception and reality of financial stability is not as simple as having a college degree and a decent credit score. In fact, 71 percent of respondents had a credit score of 620 or higher, but many chose not to use the traditional credit products to which they may enjoy access. Only 27 percent had a mortgage, and only 10 percent used a bank line of credit during the past year.

Alternatively, 47 percent used PayPal in the past year, 16 percent used a prepaid card of some kind, and 7 percent depended on a loan from a family member. Though these payment methods may help them get to the end of the month, they do not help consumers establish a credit history. What’s stopping these consumers from using the traditional financial products to gain traction in the traditional credit system?

In the Financial Invisibles Report, PYMNTS, in collaboration with Unifund, delves into the personal spending habits of modern American consumers to discover what, exactly, is holding them back. Why are so many Americans living paycheck to paycheck, depleting their bank accounts by the end of the month? Why are some consumers more susceptible to financial delinquency than others? And, most importantly, is there a way to regain financial stability?

Additional findings in our latest report include:

695: The average American consumer’s credit score

33 percent: The share of Americans who were behind on payments in Q1 2018

20 percent: The portion of those living paycheck to paycheck who anticipate delinquency in the next three months

To learn more about the spending habits of the modern American consumer, click here to download the report.