Financial Pressures Are Mounting: What Collectors Need to Know

Consumers’ spending cutbacks reveal deeper financial pressures already influencing recovery results and repayment behavior.

Consumers are feeling the weight of economic stressors in their everyday lives, and tough financial trade-offs are becoming the norm.

About half of Americans say it’s getting harder to keep up with everyday costs, and more people are delaying major purchases, rethinking their spending, and cutting back on anything that isn’t absolutely necessary, according to a recent PYMNTS Intelligence article from the latest edition of its exclusive “Generational Pulse” series.

Rising Costs Are Reshaping Household Budgets

Americans aren’t just feeling general financial pressure — they are being hit with unavoidable increases in the most basic categories of daily life.

PYMNTS noted that “21 million households (half of all U.S. renter households) spend more than 30% of their income on housing costs.” But even beyond rent or mortgage payments, PYMNTS said the biggest pain point is utilities, with 68% of individuals struggling in this area reporting that monthly utility bills are their top strain.

Food insecurity is tightening, too. Among consumers reporting difficulty with daily costs, 84% say groceries and household essentials are the main challenge. That means “42% of Americans are having trouble affording their groceries,” with “46% of baby boomers” feeling the strain most acutely, the PYMNTS report said.

These increasing expenses are directly undermining repayment capacity. PYMNTS stated that “higher living expenses may also make it harder for consumers to manage their debt, deepening the pocketbook hole.”

Pressure Mounts on Younger Consumers

While every age group is under pressure, younger consumers are facing stacked financial challenges that directly affect repayment outcomes.

According to the article, Gen Z is most affected by work and income instability and transportation expenses, and is the most likely to struggle with debt and rising credit card bills.

Health care is another universal burden, with both boomers and Gen Z in agreement that health care and wellness expenses are a current financial challenge.

Consumers Are Taking Actions — But It’s Not Enough

Sixty-two percent of consumers are spending less to help manage increased living costs, PYMNTS reported. Baby boomers and seniors are cutting back the most (70%), while only “half of zillennials have done the same.”

Still, these adjustments aren’t solving the problem. According to the report, “only 34% of consumers say the actions they have taken to manage their pocketbook challenges have been highly effective.”

Effectiveness varies significantly across age and income brackets:

• Nearly half of millennials and zillennials say their actions have been very effective.
• Only 19% of boomers and seniors feel the same.
• High-income households see the greatest impact, with “approximately half of those earning more than $150,000” reporting success compared to “just 23% of those earning less than $50,000.”

The widening gap between effort and effectiveness shows that collectors may increasingly encounter consumers who are genuinely trying to manage obligations but are stretched beyond their means.

More Consumers Are Turning to Personal Borrowing

As financial pressures continue to intensify, many are looking for temporary solutions. The report noted that “just over one in five (21%) consumers have borrowed money from friends or family to deal with rising expenses.” Among Gen Z and zillennials, that figure jumps to one in three.

This type of “informal borrowing” suggests that credit lines are maxed out or unavailable — both signs of potential delinquency risk.

Gen Z is also postponing financial decisions: “Nearly half of Gen Zers are avoiding making large purchases or investments,” according to PYMNTS. That group is more focused on maintaining day-to-day survival than planning ahead.

What This Means for the Accounts Receivable Management Industry

For collectors and creditors, several takeaways in the report stand out:

1. Consumers’ budgets are more fragile than they appear.

With “half of all consumers” struggling to cover basic living expenses, repayment ability is being stretched to the limit.

2. Rising utilities and grocery costs are competing directly with debt payments.

When monthly utility bills, groceries, and household essentials are Americans’ top stressors, unsecured debts naturally fall lower on the priority list.

3. Younger borrowers are high-risk due to overlapping pressures.

Gen Z faces the greatest combination of income instability, transportation costs, rising credit card bills, and reliance on borrowing from friends and family.

4. Consumers are trying, but efforts aren’t yielding results.

With only 34% finding relief through their own cost-cutting strategies, collectors should expect more hardship requests, payment plan needs, and longer resolution timelines.

5. The gap between high-income and low-income consumers is widening.

Those earning under $50,000, the group most likely to enter collections, report the least success in managing rising costs.

Read the full PYMNTS Intelligence report here.

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