With almost 60% of U.S. adults saying they live paycheck to paycheck1, it’s increasingly important for consumers to understand financing options and credit card debt so they can meet their short-term purchasing needs without compromising their long-term finances.
Since October is National Credit Awareness Month, Purchasing Power®, a voluntary benefit company that offers the leading employee purchase program through the convenience of payroll deduction, is reviewing some of the pros and cons of credit cards and discussing the part voluntary benefits can play in reducing financial stress in the workplace.
A few pros and cons of credit cards:
- For those who qualify for low-interest cards or have the money to pay off their balance at the end of the month, paying with plastic can be a great way to get what you need, when you need it. Prime rate credit cards offer low interest rates, rewards points, cash back and other perks.
- Having a subprime credit score – which according to the latest data from Experian represents 34.8% of consumers with a credit score – can make it more difficult to qualify for a credit card or loan. And if you do, you’ll likely end up paying a higher interest rate.
- Lines of credit for subprime borrowers likely come with a steep annual percentage rate that accrues each month. When only making the monthly minimum payments, these consumers end up carrying that debt for years before it’s fully paid down.
When it comes to employees and credit card debt, 29% are using credit cards to pay for monthly necessities they can’t afford otherwise, and almost half of employees surveyed in PwC’s 2019 Employee Financial Wellness Survey owe more than $5,000 on their credit cards.
“More and more employers now realize that benefits that help employees gain control of their financial life are a must-have,” says Elizabeth Halkos, Chief Operating Officer for Purchasing Power. “Voluntary benefits such as automated savings and bill payment programs, student loan repayment and employee purchase programs can help employees successfully budget and avoid credit card debt, giving them more time to focus on work instead of their financial stress.”
An employee purchase program offers a better way to buy when cash or prime credit are not an option. Consumer products and services are available via automatic paycheck deductions over a 6- or 12-month period. There’s no credit check, zero interest and no hidden fees, and the automatic deduction ensures employees don’t face the consequences of missed payments.
Purchasing Power, LLC, is one of the fastest-growing voluntary benefit companies in the industry, offering a leading employee purchase program for consumer products and services as well as providing financial tools and resources to offer financial flexibility to employees. Headquartered in Atlanta, Purchasing Power is available to millions of people through large companies including Fortune 500s, associations and government agencies. Purchasing Power is a Flexpoint Ford, LLC company. For more information, visit www.corp.PurchasingPower.com.
1 Charles Schwab Modern Wealth Survey, May 2019