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Financial Challenges Amid Rising Income – Achieve Survey Insights

A recent study by Achieve highlights that despite an increase in income, Americans are facing financial challenges due to rising costs and high-interest rates. Key findings from the study include:

  1. Debt Resolution Programs: In the first nine months of 2023, the average monthly participation in debt resolution programs increased by 119% compared to 2020, despite a 37% rise in average earnings during the same period.
  2. Income and Debt Levels: The typical household income of individuals enrolled in debt resolution programs in 2023 was $59,900, a significant increase from $43,598 three years prior. However, higher earners in these programs had a higher ratio of outstanding debt to total available credit on credit cards.
  3. Credit Card Utilization: The credit card utilization rate of debt resolution members was 76% in 2023, up from 69% in 2020. Additionally, their median credit score was lower at 581 compared to 601 in 2020.
  4. Financial Struggles of Millennials: The study noted a shift in the age demographics of debt resolution members, with the median age decreasing to 44 in 2023 from 52 in 2020. Millennials accounted for 39% of those enrolling in debt resolution programs in 2023, up from 25% in 2020.
  5. Rising Credit Card Balances: Credit card balances increased by $154 billion year-over-year, marking the most significant increase since 1999. The total increase in debts, including auto loans, reached $786 billion from the previous year.
  6. Credit Card Delinquencies: Delinquencies on credit card payments rose, particularly among millennials aged 30 to 39, who are also burdened by high levels of student loan debt.
  7. Holiday Spending and Credit Cards: Holiday spending is expected to reach pre-pandemic levels, with consumers planning to spend on average $875. However, store credit cards are charging interest at a record-high rate of nearly 30%.
  8. Deferred Interest Financing: Many stores offer zero percent interest financing during the holiday season, but consumers should be cautious as these often involve deferred interest, potentially leading to higher costs if not paid in full within the introductory period.

Financial Advice: For individuals struggling with high-interest debt, considering a personal loan at a lower interest rate could be a viable option. Platforms like Credible allow users to compare loan options without affecting their credit score.

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