New Financial Stress Survey Shows How Workers Deal with Unexpected Expenses
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nexpected expenses can derail budgets and send those living paycheck-to-paycheck further into credit card debt.
Results of a survey conducted online by The Harris Poll on behalf of Purchasing Power in December 2019 among 807 U.S. adults who are employed full-time reveals that 83% of full-time employed Americans faced an unexpected expense in the last 12 months. Of those, 41% turned to a credit card to cover the cost.
While paying cash or using a low-interest credit card is the ideal way to cover unexpected expenses or pay for needed items, that's not always a reality for many American workers, says Trey Loughran, Purchasing Power CEO. Credit card debt is at an all-time high1, with the youngest borrowers having the highest delinquency rates. When appliances break down or automobile tires wear out, these consumers don't have cash or access to affordable credit to weather the storm.
According to The Harris Poll/Purchasing Power survey, the top unexpected past 12 month expenses were vehicle repairs/replacement (48%), medical expenses (35%), travel for things such as a funeral, sick relative or unexpected move (28%), replacing/upgrading major appliances that stopped working (28%) and home repairs (27%).
In addition to paying with a credit card, those who had unexpected expenses in the last 12 months used money that was earmarked for other household bills (24%) or used money from their emergency fund (23%) to pay for the unexpected expenses. And 16% took out a loan to cover the unexpected expense(s).
Employees are seeking options for meeting their short-term financial needs without compromising their long-term finances, says Loughran. Voluntary benefits like employee purchase programs, emergency savings accounts and student loan debt repayment support are a continuing trend in workplaces. Employers are realizing stressors like credit card debt and unexpected expenses don't just impact an employee at home. They can lead to distraction and lower productivity in the workplace as well.
As a voluntary benefit offered through large companies, associations and government agencies, Purchasing Power provides an employee purchase program as a buying alternative to cash-strapped employees. Through the employee purchase program consumer products and services are available via automatic paycheck deductions over a 6- or 12-month period. There's no credit check, zero interest and no hidden fees. The automatic deduction ensures employees don't face the consequences of missed payments.
In addition to the latest reports on rising credit card debt, Fair Isaac Corporation (FICO)'s recent announcement that it's changing the way it computes credit scores means access to prime credit could decline for millions of consumers. Many employees are going to need other options to make ends meet, Loughran concluded.
✔️ New Financial Stress Survey Shows How Workers Deal with Unexpected Expenses
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