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Majority of Americans Believe Credit Cards Contribute to Financial Stress

A recent survey commissioned by Affirm, a buy now, pay later financial technology company, found that most Americans believe that credit cards are a major factor in their financial strains. The poll, was conducted by OnePoll and surveyed 2,000 of the general U.S. population, and looked at the American attitudes and priorities of finances and the shift in budgeting amidst the current economic uncertainties.

With Americans facing record-high levels of credit card debts and fees, it’s no surprise that nearly three in four Americans said credit cards are a challenge to manage finance (73 percent). While 64 percent of people polled said they “feel in control of their finances,” almost 80 percent of Americans think they could be doing a better job in their management.

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In June 2023, the U.S. personal saving rates reached 4.3 percent — up from a 15-year low of 2.7 percent in June 2022. Sixty-eight percent of respondents reported that saving more was the most common strategy for the first and second quarters. The report suggests that this strategy explains why more than three in four Americans feel prepared for a potential recession (76 percent).

Despite this, the average poll respondent said they were “spending $350 over budget in the past six months.” Moreover, 83 percent of Americans noted they plan to make the necessary adjustments to their budgets for the rest of the year.

To help take control of their financial situations, more Americans are turning to alternative payment options. Affirm’s study found that the buy now, pay later installment loan system was the number-one option. Forty-eight percent of survey respondents said using this payment method made them feel the most in control, with 41 percent of respondents reported the same while using credit cards and 28 percent reported cash.

“We can’t talk about buy now, pay later without putting it in the context of the larger credit landscape,” said Libor Michalek, president of Affirm. “The reality is that the average American has three credit cards and nearly $6,000 in revolving credit card debt, while financial institutions collect billions in late fees each year. That is a lot of money coming from consumers’ pockets when they need it most. We offer a more intelligent and responsible way to access credit — you can’t revolve with Affirm by design, and we don’t charge late or hidden fees.”

When using Affirm, customers have to apply every single time, no matter the cost. Whether it’s a sweater, an engagement ring, a couch or a vacation, each loan decision is based on a range of factors. Consumer credit history, debt obligations with the company and outside creditors, current income and cost of purchase are just some of the points of consideration.

Once approved, Affirms consumers select the best payment option for them and their budgets, with customizable payment options. Payment options include interest-free or simple-interest bearing, with customers never paying more than the total amount at checkout.

Michalek further notes that the worst thing the company can do for its customers and its business is to loan money to someone when it’s irresponsible. He said that if Affirm believes that someone is overextending themselves financially, they will tell them “we don’t think you should buy this” versus blindingly approving them.

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