CHICAGO (12/17/12)--Nearly half of Americans surveyed--48%--say they are living paycheck to paycheck, while 44% indicate they are simply trying to stay current on bills or home payments and avoid excessive debt or bankruptcy, says a new survey from online lender NetCredit.
Credit unions can view that news as a warning that members living check to check could experience significant financial problems if something in their life changes. Warning signs can include any situation in which income is lost or sudden, unexpected bills. Many past bankruptcies have been attributed to lost income from a death, a divorce, loss of a job, or an increase in bills such as medical or legal bills.
Credit unions can also see the study as a marketing opportunity to make members aware of their savings programs and better rates, a financial counseling opportunity, or a chance to deliver financial education/money management information through a number of channels.
NetCredit collected some demographics, which could help credit unions know where to start. The population segments where concern about living paycheck to paycheck runs highest were:
- Americans under the age of 60--54%;
- Families with children--57%;
- Families with five or more people in the household --64% vs. 45% for smaller households; and
- Residents of southern states--53% vs.41% for those in the Northeast U.S.
"Living paycheck to paycheck puts many Americans dangerously close to their own personal fiscal cliff should they be hit with an emergency expense," said Stephanie Klein, who heads NetCredit's consumer lending. "An unexpected medical bill, car repair or higher than usual utility bill can easily push them beyond their ability to pay bills on time," she added.
The survey asked where the respondents would turn to if they needed money. Nearly 30% said they would turn to more than one of these options:
- General savings, 61%;
- Credit card, 23%;
- Family/friends, 16%;
- Separate rainy day fund, 15%;
- Pawn or sell items--7%;
- Bank loan--5%;
- Short-term cash advances--4%; and
- Installment loans--2%.
"But there might not be enough cash there to handle the crisis," said Klein. A recent study by the Federal Deposit Insurance Corp. indicates that nearly half of Americans cannot access $2,000 in 30 days to meet an emergency, she said, noting that consumers need more flexible options to get cash, especially during emergencies.
TNS Omnibus conducted the online survey in September with a nationally representative sample of 1,000 Americans age 18 or older.