Living paycheck to paycheck is no longer confined to the working class, as indicated by SoLo’s 2025 Cash Poor Report.
The survey conducted by SoLo involving 2,000 adults revealed that a significant segment of middle-class Americans—including those with college degrees, homeowners, investors, and six-figure earners—are experiencing cash poverty. Cash poor refers to individuals lacking sufficient liquid cash to manage unexpected expenses, which averaged $1,825 for those living paycheck to paycheck last year. Alarmingly, one in seven cash-poor individuals earns over $75,000 annually.
To address unforeseen costs like medical bills and vehicle repairs, many turn to costly short-term loans that can compound their financial strain, according to SoLo.
“Being cash poor is a reality for a majority of Americans, leading to difficulties in managing variable and unexpected expenses,” states Rodney Williams, president and co-founder of SoLo.
Who are the most at-risk cash-poor Americans?
As per SoLo,
In need of some fun? Try the USA TODAY Daily Crossword Puzzle.
What are Americans spending on short-term loans?
Americans spent over $39 billion—34% more than in 2023—on fees for borrowing funds to manage their unexpected expenses, according to SoLo. These fees were in addition to the already high Annual Percentage Rates (APRs) that often exceed 20% for credit cards.
What types of short-term loans do Americans utilize for financial gaps?
To finance surprise costs such as medical emergencies or home repairs, cash-poor Americans typically resort to some of the following options:
- Subprime credit cards: The costliest option, averaging 48% and rising from 41% in 2023. Fees can escalate to 90% of the borrowed amount due to high total fees, penalties, and maintenance charges.
- Payday loans: Average costs stand at 35%, increasing from 33% in 2023. Maximum costs can hit 67% due to origination and late fees.
- Buy now, pay later (BNPL): Although generally affordable with minimum fees averaging just 2%, costs can reach up to 45% when interest and additional fees are included.
- Earned wage access: This option allows access to wages before payday, with an average borrowing cost of 13%, but fees can reach 26% if optional tipping and transaction fees are factored in.
- Bank small-dollar loans: These loans, typically under $1,000 and repaid within weeks or months, have an average cost of 25%, with a minimum fee of 12%, mainly due to account balance and deposit requirements.
- Peer-to-peer (P2P) loans: These have the lowest overall borrowing costs but can average 17% due to tips and late penalties.
- Loans from friends and family: Last year, 43% of surveyed individuals borrowed money from relatives or friends, up from 38% in 2023. These loans typically involve no fees.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can contact her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
