Addressing America’s Financial Health Crisis

In the new PYMNTS eBook, “What’s Your Plan? Payments Strategies for a Strong 2022 Finish,” LendingClub SVP and Financial Health Officer Anuj Nayar says providing consumers with financial tools and education is critical in an unpredictable economy.

As we reflect on 2022 and in particular Q3, it’s clear that the sustained uncertainty of the macroeconomic environment coupled with continued inflation and Fed rate hikes have significantly contributed to America’s financial health crisis. LendingClub, the digital marketplace bank, has worked hard to alleviate the debt burden carried by millions of Americans and shine a spotlight on their struggles. Through the “New Reality Check: The Paycheck-To-Paycheck” reports, a collaboration with PYMNTS, LendingClub has helped bridge the education gap to provide critical financial information, spark conversation and give insight into what shapes American financial lifestyles and ways consumers can become more financially savvy. The big takeaway is that consumers of all socio-economic backgrounds are feeling the heat.

In Q3, we’ve seen a surge in living costs and consumers of all financial lifestyles have found it increasingly difficult to make ends meet. Consumers are not only faced with navigating the precarious macroeconomic climate, but also must deal with a cooling job market, widespread anxiety heightened by crises like Hurricane Ian, and financial institutions that may not have their best interests at heart.

According to the most recent report, 92% of consumers who purchased products in the last 90 days said they’ve noticed higher prices in what they purchase, with the most significant increases coming from utility, food and housing expenses. As a result, we’ve seen a majority of consumers lean on products like credit cards as payment tools to fund their lives amid the cash crunch. But data shows that many consumers did not notice changes to the interest rates of credit products, despite increased credit card usage and tightening budgets. This, coupled with the fact that there is still a disconnect with consumers not yet seeing the true cost of certain credit products, leaves them vulnerable to serious implications particularly when only the minimum amount of credit card debt is being paid off each month. This implies the need for more education and tangible tools that are created to be in benefit of the consumer, not just the banking institution.

With the holidays just around the corner, understanding one’s financial lifestyle and spending habits is particularly important. Predictions anticipate holiday consumer spending to be at a historic low, but with access to credit cards, buy now, pay later (BNPL) and other new products in the credit space, it will be interesting to see how the end of 2022 shakes out. Regardless, arming consumers with financial tools and education is paramount to navigating one’s financial path, especially throughout such an unpredictable market.

In Q4, LendingClub will continue to help its members understand the true cost of credit through innovative financial products and services that empower them on their path toward financial health.