Majority of Americans made sacrifices to cover monthly bills last year
Lower-income households more likely to turn to borrowing with credit card debt already at all-time high
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Most Americans found themselves forced to make trade-offs in order to make ends meet last year, with a majority reporting they had to take measures in at least one instance to cover monthly bills in 2023.
A new study released Thursday by Assurance IQ found 66% of U.S. adults confirmed in a December survey that they had made sacrifices to pay their expenses during the previous 12 months, and they broke down the various tactics they used.
A new study found most Americans had to make sacrifices to pay their monthly expenses last year, and the most common tactic for covering those bills was resorting to credit cards or other borrowing. (iStock / iStock)
Researchers polled 5,000 individuals, a majority of whom earned $75,000 or more a year, and found the most common way Americans covered their bills when they were short on funds was to borrow money or turn to credit cards (41%).
Unsurprisingly, lower-income households were hardest-hit, and those making less than $75,000 were more likely to borrow funds for expenses, with 47% saying they needed to do so last year.
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Americans have been increasingly leaning on credit cards for daily expenses in recent years as high inflation has taken a toll on household budgets. Credit card debt surged to a new record high of $1.13 trillion as of the end of December, according to New York Federal Reserve data.
U.S. credit card debt hit a record high of $1.13 trillion at the end of last year. (Robert Nickelsberg/Getty Images / Getty Images)
However, consumers are increasingly taking on more debt than they can handle, and credit card delinquency rates are now above pre-pandemic levels after dropping following COVID-related government subsidies.
The Assurance study found that across all incomes, the second-most common way Americans handled a situation where they were short on funds last year was to pay a bill late, at 38%.
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Thirty-four percent of respondents said they used other methods to pay their bills in a pinch, like pulling from their emergency savings, but many had to resort to other tactics.
Almost one-quarter of U.S. adults said that during 2023 they had skipped meals in order to cover monthly expenses. (Photo by Leonardo Munoz/VIEWpress / Getty Images)
Nearly one-fourth (24%) said they skipped meals to cover their bills, while 23% sold possessions, another 23% said they overdrew their bank accounts, 21% said they negotiated payment terms and 9% canceled or decreased insurance coverage.
"Our research found that not only do low- and middle-income households struggle to cover emergencies and unexpected expenses, but they also must make tradeoffs to keep up with regular bills," Assurance IQ CEO Allison Arzeno told FOX Business.
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"Without a financial safety net, many households find themselves constantly on the brink of poverty," Arzeno added.