As summer approaches, many Americans are planning vacations and other leisure activities. But inflation is holding many of them back this year, according to a survey by ScoreSense.
In fact, 50% of respondents said they will cancel or postpone vacations due to financial challenges, ScoreSense reported. Meanwhile, one in three said they plan to spend less on expensive vacation locations. About half (53%) of respondents reported planning a vacation that costs less than $2,000.
"Consumers are concerned about a possible recession this year and are stressed financially due to inflation," ScoreSense said in its report. "They are using personal loans to help pay for typical monthly purchases like groceries, utility bills, and mortgage payments. People are looking for money-saving strategies such as couponing, buying things on sale, and switching to store brands over name brand items."
Plus, inflation stress seems to be a global issue, one analysis found.
In fact, 74% of workers across the globe said inflation was the top cause of stress in their lives, according to research by Fidelity Investments.
"Given all the stresses in the world today, such as natural disasters and geo-political events, Americans continue to confront challenging times in our economy," Kevin Barry, the president of Workplace Investing at Fidelity Investments, said in a statement.
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To deal with inflation, many Americans are cutting back on non-essentials, ScoreSense found. Here’s what respondents said they spent less on this past April than they did the year before.
Still, many Americans also said they’re cutting back on basic necessities. In particular, 33% of Americans said they’re cutting back on groceries, ScoreSense reported.
Despite a slowdown of inflation in recent months, 61% of Americans said high prices have caused financial hardships in their households, according to a poll by Gallup.
"Even as inflation has been cooling, the effect of continued high prices has broadened the financial pain Americans are feeling," Gallup said in its report.
"The increases in these readings suggest that the recent slowing of inflation has so far done little to provide relief for Americans, and it may take more dramatic changes in prices for the harmful effects of inflation to subside," Gallup continued. "The public lacks confidence in economic leaders to tackle the problem."
And whether the Federal Reserve will stop raising interest rates in light of still-high inflation remains uncertain.
"Since early last year, we have raised interest rates by a total of 5 percentage points in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time," Fed Chairman Jerome Powell said at a May press conference. We are also continuing to reduce our securities holdings. Looking ahead, we will take a data-dependent approach in determining the extent to which additional policy firming may be appropriate."
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In light of high expenses, many Americans are resorting to personal loans to cover necessities such as food, according to the ScoreSense survey. Here’s what Americans have used personal loans on, based on ScoreSense data.
In addition, personal loan balances have been growing among Americans since last year. Total unsecured personal loan balances reached $225 billion in the first quarter of 2023, marking a 26.3% year-over-year increase, according to a TransUnion report.
"We have seen record levels of originations in credit cards and unsecured personal loans since mid-2021 as strong credit positions have allowed consumers access to additional products," said Michele Raneri, the vice president of U.S. research and consulting at TransUnion. "As inflation rose to near 40-year high levels, many consumers have used credit to help manage their budgets, leading to record- or near-record high balances. It remains to be seen whether these balances will continue to grow in the near-term, or if growth will slow as consumers moderate their pace of borrowing and if lenders more closely scrutinize consumers and potential risk when determining to whom they lend moving forward."
When determining personal loan terms including interest rates, most lenders consider the following, according to the Consumer Financial Protection Bureau (CFPB).
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