Despite easing inflation rates, families continue to rack up credit card balances.
The economy continues to buck financial experts’ expectations with a resilient labor market and decreasing inflation. That’s leading to increased optimism among middle-income Americans, but many of these families continue to struggle with the high cost of living.
Primerica’s most recent quarterly survey found that 22% of respondents believe they will be better off financially a year from now, a rise of six percentage points since June 2022, and 26% believe they will be worse off, down 15 percentage points in the same time frame.
However, the same survey found that families are increasingly racking up credit card balances and debt to make ends meet. About 36% of respondents said they used their credit card more in the past year, up five percentage points since June 2022, and 33% said their debt increased, up four percentage points in the same time frame.
“Even as inflation rates continue to fall, our survey results show middle-income families are being hit by high costs, increasingly relying on credit cards for everyday purchases,” said Peter W. Schneider, President of Primerica. “At the same time, the survey also highlights Americans’ resilience and increasing optimism that better financial days are ahead.”
The results call attention not only to the continued challenges facing middle-income Americans but also the value of budgeting, saving and being well versed in the financial fundamentals that are key to reaching their financial goals.
Overall, 71% of respondents in Primerica’s latest survey said their income is falling behind the cost of living. About 76% are cutting back on non-essential purchases, and 48% are cutting back or pausing saving for the future to make up the difference.
Those who have taken few steps to strengthen their financial security, however, are finding the rising cost of living to be even more challenging. For example, 61% of respondents who said they are unable to pay their full credit card balance each month find managing this debt difficult, an increase of three percentage points since the March 2023 survey.
“The results of Primerica’s Financial Security Monitor survey this quarter once again highlight the importance of financial preparedness, as those who save and invest every month, make more than the minimum payment on their credit card and complete other financial fundamentals are more optimistic about and better prepared for their financial future,” Schneider said.
The survey also highlights the value of financial guidance from a professional — not a machine. Only 29% of respondents said they are very confident in making sound financial decisions without outside professional help, and lack of time and anxiety continue to be the biggest challenges people face with tracking their financial information. But that doesn’t mean middle-income Americans are willing to turn to AI for help.
Most middle-income households are not interested in using AI for a wide range of financial tasks, including recommending a financial advisor or consultant (83% not interested), giving financial advice (82%), suggesting a financial plan for retirement (81%) or selecting stocks or mutual funds (78%).
To learn more about Primerica’s Financial Security Monitor visit, https://www.primerica.com/public/financial-security-monitor.html.
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