60% of Americans are living paycheck to paycheck before the 2022 holidays

Just as the holiday shopping season is in full swing, families are finding less slack in their budget than before.

In October, 60% of Americans were living paycheck to paycheck, according to a recent LendingClub Report. A year ago, the number of adults who felt too stretched was closer to 56%.

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“More and more consumers who have always managed their budget comfortably are feeling the financial strain, which will impact their spending behavior as we head into the holiday shopping season,” said Anuj Nayar, head of the financial health of LendingClub.

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Not only are daily expenses higher, but inflation has also caused real wages to fall.

Real average hourly wages are down 3% from a year earlier, according to the latest readings from the U.S. Bureau of Labor Statistics.

A separate Salary Finance report found that two-thirds of working adults said they were financially worse than a year ago.

Already, credit card balances are increasingup 15% in the last quarter, the biggest annual jump in more than 20 years.

About half of buyers said they would buy fewer things due to higher prices, and more than a third said they would rely on coupons or other money-saving strategies, according to a separate survey by RetailMeNot.

More consumers are also considering finance purchases this year with credit cards and buy now, pay loans later.

And 25% of shoppers said they would opt for cheaper versions or more convenient freebies, such as gas cards, according to another holiday survey by TransUnion.

“People are trying to economize and make the most of what they have,” said Cecilia Seiden, vice president of retail for TransUnion.

Vacation spending could come to a high cost if it is to go into debt on an additional credit card, just like the Federal Reserve raises interest rates to slow inflationaccording to Ted Rossman, senior industry analyst at CreditCards.com.

“It’s easy to get into credit card debt and hard to get out of it,” he said. “High inflation and rising interest rates make it even more difficult to release.”

Credit card rates now average 19% — an absolute record — and these rates will continue to rise since the central bank has indicated even more increases are coming until inflation shows clear signs of receding.

“It makes it more likely for credit card companies to raise their interest rates and makes the money you owe more expensive over time,” added Natalia Brown, head of customer operations at National Debt Relief.

Rising inflation and interest rates mean consumers need to be especially watchful, she said.

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