Paycheck-to-Paycheck Shoppers Are Overspending

American consumers were busy spending this fall and less engaged with saving.

Personal consumption, personal interest payments, and personal current transfer payments increased $70.7 billion in September, according to the Bureau of Economic Analysis.

The personal saving rate as a percentage of disposable personal income held steady in September at 4.7%. It was 4.9% in July and 5.0% in June. 

Cash Crunch for Paycheck-to-Paycheck Consumers

Consumers living paycheck to paycheck are turning to credit to make ends meet and to cover costs. This may lead to profits for lenders as more consumers swipe their credit cards to make purchases and carry balances from month to month.

But this also could be an indicator of future delinquencies and defaults if the overspending continues at the same pace and over many months. This is something lenders will want to monitor carefully.

Offering cash-strapped consumers new ways to stretch out payments is one strategy to meet the credit needs of paycheck-to-paycheck customers. One product that may appeal to consumers who live paycheck to paycheck is credit card installments. 

Of the shoppers who are living paycheck to paycheck, 58% said they used credit card installments to pay for purchases on Black Friday, according to a PYMNTS survey.

How Many Consumers Are Living Paycheck to Paycheck?

Just how many consumers are living paycheck to paycheck? In 2025, almost one-quarter of all U.S. households live paycheck to paycheck. The number of low-income households, especially those led by Gen Xers and millennials, living paycheck to paycheck continues to rise, according to internal data from Bank of America.

One reason these households are under financial pressure is because inflation has grown faster than after-tax wages for middle and lower-income households in 2025, according to Bank of America. 

Financial Stress Affecting Consumer Sentiment

All this financial stress is impacting consumer sentiment, according to a survey of consumers  from the University of Michigan. Here is a look at consumer sentiment throughout 2025.

Consumer expectations had four months of sharp increases at the start of 2025 and then fell for three consecutive months through July. This was followed by three months of only small increases. 

More recently, consumer expectations have slipped the past two months. A preliminary reading  for December shows consumer expectations are well below top levels such as those in June 2022 and April 2025 but the December reading also is above most 2024 readings. 

“Expectations exhibit substantial uncertainty, though less than in mid-2025,” the University of Michigan survey of consumers reveals. 

Consumers grappling with uncertainty will eventually act. Whether it’s a positive move, like using a credit card installment to stretch out a needed payment, or simply pushing a credit card ever closer to its limit, each decision will have an impact on a consumer’s credit and financial bottom line. 

The Bottom Line

Almost one-quarter of U.S. households are living paycheck to paycheck. Many are spending beyond their means and welcome ways to stretch their credit payments such as with credit card installments. Consumer sentiment rose slightly in December compared with November’s index, but is well below year-ago figures. 

Educating consumers about their credit card options, including through installments, is a smart way to assuage consumer worries.