Building strong financial habits is always a good idea. But when it comes to your credit score, not every smart move counts. In fact, many habits that help you feel financially secure have no effect on your credit file at all.

That does not mean they are worthless. These habits can help you avoid financial stress, stay on track with bills, and build long-term stability. However, credit scores are based only on specific types of credit activity, so many of your everyday financial choices are not reflected.

1. Budgeting and tracking your spending

Keeping a budget helps you manage your income, reduce unnecessary expenses, and plan ahead. But your credit score does not measure how well you manage your cash flow or how closely you stick to a budget.

Even so, consistent budgeting can make it easier to stay on top of bills and avoid financial strain. It does not directly affect your score, but it may help support other habits that do.

2. Building a savings cushion

Having emergency savings is one of the most important things you can do for your financial health. However, your savings account balance is not included in any credit score calculation.

Saving money does not directly affect your score, even if it gives you more financial flexibility. It may help you avoid missed payments or the need to borrow, but the act of saving itself is not part of your credit profile.

3. Using debit cards or cash

Spending with debit or cash may help you avoid overspending or interest charges, but it does not create any credit history. Debit card use is not reported to credit bureaus, and neither is cash spending.

If you rely only on non-credit tools to manage your money, your credit report may remain thin or inactive. These habits can support financial control, but they will not build or improve your credit score unless you use a service like Sesame Cash. By enrolling in Sesame Credit Builder, members can build credit by making debit purchases that are reported as on-time payments to help establish credit history.

4. Investing for retirement

Contributing to a retirement account like a 401(k) or IRA is a smart long-term move, but it does not affect your credit score. These accounts are not loans or credit products; credit scoring models do not consider your investments or account balances.

Even with a strong portfolio, your score will not change. Retirement savings build financial security, but are not part of your credit profile.

5. Avoiding all debt entirely

Some people take pride in never borrowing, which can be a responsible lifestyle. But in the eyes of credit scoring systems, no credit history means no credit score.

If you avoid all loans and credit cards, you may find it challenging to qualify for credit if you ever need it. You may prefer to live debt-free, but remember that credit activity is required to build a credit file.

6. Couponing and comparison shopping

Clipping coupons, price checking, and planning your purchases are smart ways to stretch your money. But none of these habits are connected to your credit report.

These strategies may help you spend less or save more, but they do not directly affect your credit score.

7. Saving for large purchases

Setting aside money for big expenses like travel, appliances, or home repairs may be a smart way to avoid debt. Paying from savings can be satisfying and help you stay financially grounded.

But saving enough to buy a car or a home outright may take years. In some cases, it may not be realistic at all. Strong credit can be the key to moving forward without added financial strain.

Integrating good credit behavior into your money management habits

Strong money management habits like saving, budgeting, and paying bills on time help you stay financially stable. But if you are not using credit accounts, these habits typically do not affect your credit score.

There are limited exceptions. Rent and utility payments are usually not reported to credit bureaus unless they become seriously overdue. Some third-party services, such as Experian Boost or Credit Sesame’s rent reporting feature, may allow certain payments to appear on your credit file. These services are optional and apply only to specific credit scoring models.

Once you begin using credit cards, loans, or other types of borrowing, credit behavior becomes part of your overall financial strategy. At that point, habits like paying on time, keeping balances low, and managing accounts responsibly are just as important as saving and budgeting.

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Disclaimer: The article and information provided here are for informational purposes only and are not intended as a substitute for professional advice.

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Credit scores can influence everything from the interest you pay on a loan to the credit cards you can qualify for. But not all strong scores are equal. A score that’s considered good may get you approved, but a great score could get you better terms, more offers, and lower long-term costs. That gap can have a big impact on your financial future.

Credit scores by the numbers

Most lenders rely on either the VantageScore or the FICO Score to assess creditworthiness. Both use a scale from 300 to 850 and draw on similar credit report data, but the way they classify scores differs slightly.

Although people often talk about a single credit score, everyone actually has many. You may have a FICO Score 8, a VantageScore 3.0, and several industry-specific scores, such as versions used for auto lending or credit card applications. Each score is calculated using the same core credit data, but different models or lenders may weigh certain factors more heavily. This is why your score might vary slightly depending on where you check it. There is some overlap, and many models consider scores in the mid-600s to low 700s as good, and scores above roughly 740 as great or excellent.

What a good credit score can offer

If your credit score falls in the good range, you’re likely to qualify for a wide variety of loans and credit cards. You may be approved for a mortgage, get an auto loan with a reasonable rate, or open a credit card with moderate rewards.

The catch is that you may not get the best terms. Lenders use risk-based pricing, which means you might face higher interest rates or fees than someone with excellent credit, even if you both qualify for the same product.

Good credit shows that you’re responsible with debt, but lenders may still view you as a moderate risk. That uncertainty can translate into slightly stricter lending conditions.

Why a great credit score makes a difference

When your score reaches the great (very good, excellent or exceptional) range, the benefits tend to become more noticeable. Lenders see you as a low-risk borrower. That means you may be offered:

• Lower interest rates
• Higher credit limits
• Faster loan approvals
• Access to top-tier credit cards and rewards programs
• Better terms on refinancing or balance transfers

Over time, these advantages can add up. According to the Consumer Financial Protection Bureau, credit score is one of seven factors determining the interest rate you are offered on a mortgage.

What separates good from great

Great credit takes more than just avoiding mistakes. It reflects long-term, consistent financial behavior. If you already have a good score, moving up typically means refining your habits rather than overhauling them.

Several key differences tend to separate the two categories:

• Credit utilization is typically lower. Many borrowers with excellent credit use less than 10 percent of their available credit.
• Credit history is longer. Lenders like to see that you’ve managed credit responsibly over many years.
• Accounts are older and well-maintained. Keeping long-standing accounts open contributes to score strength.
• New credit applications are limited. Applying for multiple accounts in a short time can reduce your score temporarily.
• There’s a solid mix of credit types. A combination of revolving credit (like credit cards) and installment loans (like car loans or mortgages) can be a plus.

For a full breakdown of how credit score factors work, see Credit Sesame’s guide to what affects your credit score at https://www.creditsesame.com/learn/credit-score/what-affects-your-credit-score/.

Moving from good to great

If your score is already in the good range, reaching great credit status may be a matter of consistency. Paying on time every month is essential, but it’s also worth paying attention to the details.

Start by reviewing your credit reports for accuracy. A single incorrect late payment could be holding your score back. Then look at your reported credit utilization. Even if you pay your balance in full, your issuer might report a high balance at the wrong time. Paying down balances before the statement closing date can help.

If your credit history is fairly new, time will help — as long as you keep accounts open and active. Avoid unnecessary hard inquiries, and consider using a tool that lets you get credit for nontraditional payments like rent or utilities.

Monitoring your credit over time is one of the most effective ways to stay on track. A free credit monitoring tool can help you follow your progress and spot issues early.

Why the extra effort is worth it

A good credit score is a strong start. But a great score can offer more options, better pricing, and long-term savings. Whether you’re borrowing for a home, financing a car, or simply trying to qualify for a high-rewards credit card, the difference between good and great may determine how much you pay or how far your money goes.

Building excellent credit doesn’t require perfection. It does require attention, patience, and the willingness to stay consistent even when the results take time. But for many people, the payoff can be well worth it.

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Confidence among America’s chief executive officers (CEOs) has just experienced its steepest drop since 1976, according to a new survey.

When concern rises at the top, it often trickles down. If business leaders are bracing for trouble, it may be time to prepare yourself. The good news is that a few smart steps now could put you in a much stronger financial position.

Survey shows a drastic drop in CEO confidence across the U.S.

The Conference Board is a nonpartisan, nonprofit organization that analyzes business conditions and provides insight to executives. As part of this effort, they keep a finger on the pulse of business leaders with regular surveys of chief executive officers.

A May 2025 survey found that CEOs have become more concerned about the economy in recent months. In fact, the decline since the previous quarter was the largest in the survey’s history, which dates back to 1976.

How worried are America’s business leaders? Here are some signs that concern is rising:

• 82% of CEOs said economic conditions had worsened over the past six months, compared to just 2% who said they had improved.
• 69% said conditions in their industry had deteriorated, compared to 7% who reported improvement.
• 64% expect economic conditions to decline further over the next six months, while only 18% expect improvement.

How bad could things get? 83% of CEOs expect a recession in the next 12 to 18 months. That is up from just 30% late last year.

What is driving these concerns? The top three issues cited were:

• Geopolitical instability
• Trade and tariffs
• Legal and regulatory uncertainty

Overall, economic concern among business leaders is rising quickly, and that level of caution could influence broader decisions affecting jobs, wages, and investment.

How CEO pessimism can affect the workforce

CEO concerns are not always accurate predictions, but they often shape real decisions that affect employees. When executive confidence falls, it can ripple through hiring, pay, and investment plans.

Here are some examples of how CEO pessimism might affect the workforce:

• Slower hiring. One of the first things that happens when leadership faces uncertainty is a delay or cancellation of hiring plans. This may already be happening, as job growth has been sluggish so far in 2025.
• Wage increases become stingier. As demand for workers eases and budgets tighten, companies feel less need to pay up to retain employees. Your next raise may be harder to come by.
• Employee perks are trimmed. One way to cut employment costs without the morale hit of reducing pay is to eliminate some employee perks. Everything from the company picnic to 401(k) matching contributions could be affected.
• Investment slows. R&D, new plant and equipment, and ad campaigns are all expenses that do not pay off immediately. CEOs may become more hesitant to invest in the future during periods of economic uncertainty.
• Layoffs start. Once demand slows, companies may look to reduce headcount to protect the bottom line.

To some extent, CEO pessimism can become a self-fulfilling prophecy. When companies reduce spending and cut jobs, it can weaken the broader economy.

How to protect yourself in an uncertain economy

When your company’s head is worried about the economy, it can affect you in several ways. In response, here are some things you can do to get ready:

• Build a little cushion into your budget. Whether it’s a smaller bonus, having your hours cut or even losing your job, economic concerns could affect your take-home pay. This would be a good time to take a look at your budget to see which costs you can reduce or eliminate.
• Rein in borrowing. If you’ve been borrowing regularly to make ends meet, it would be wise to break that habit. If the economy worsens, look for lending standards to tighten. It might become harder to get new credit, and existing credit limits might even be cut.
• Raise emergency savings. If you don’t have one, this would be a good time to start an emergency fund. If you already have one, this might be a good time to build it up. If the job market weakens, more people may lose work, and it may take longer to find a new job. A larger emergency fund could help you stay afloat.
• Work on your credit score. This could help you retain access to credit even if the economy weakens.
• Update your job skills. Look for ways to increase your value to your employer. That may keep you off any layoff list. It would also make you a more attractive candidate if you have to find a new job.

Taking steps to prepare for a rough economy may not change what executives do next, but it could make a real difference in how well you weather it. Building financial stability now can help you feel more secure, even if the road ahead is uncertain.

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Your credit score reflects more than just how you borrow. It also responds to how you manage bills, track spending, and make consistent financial decisions. When these actions become part of your daily routine, it can be easier to maintain good credit habits and support long-term financial health.

1. Turning on autopay across your accounts

Autopay helps prevent late payments, which can have a significant impact on your credit score. Even a single missed payment can leave a lasting mark. Setting up automatic minimum payments on credit cards, loans, and utilities can reduce that risk. You can still aim to make extra payments manually to pay down balances or avoid interest.

Try this: Set up autopay for the minimum amount due on all credit accounts, then pay off additional amounts manually when you know your cash situation later in the month.

2. Paying your credit card weekly instead of monthly

Credit utilization is the amount of credit you use compared to your total limit, and it plays a significant role in your credit score. Even if you pay your card in full each month, a high balance at any point in the billing cycle can increase your reported utilization. Making weekly payments helps lower your balance, which may help support your score.

Try this: Choose a frequently used card and make a payment each week to help keep the balance in check.

3. Assigning one subscription to a credit card

A recurring charge such as a streaming service can help keep a credit card active. Using a credit card for a small monthly bill and paying it off in full each month supports payment history while minimizing the risk of overspending.

Try this: Pick one stable monthly subscription, connect it to a card you rarely use, and automate billing and the full payment every month.

4. Choosing a credit-building tool

Some banks and fintechs offer tools like secured credit cards, rent or utility payment reporting, and credit monitoring. These options can help you build positive habits and strengthen your credit using accounts you already manage.

Try this: Explore available credit-building tools and see which one fits your needs and goals.

5. Putting a utility bill in your name

Utility payments are not typically reported to credit bureaus unless you use a third-party service that shares that information. Taking responsibility for a household bill may give you more control over payment timing, and opting in to a reporting tool can help include those payments in your credit history.

Try this: If possible, take over one shared bill, such as internet or electricity, and explore services that allow you to report on-time payments.

6. Living in one place longer

Frequent moves increase the risk of lost mail or missed bills, perhaps leading to late payments or collections. A stable address supports better bill management and may help lenders see you as more reliable. If moving often is necessary, digital billing and mail forwarding can help reduce disruptions.

Try this: When possible, stay at one address for at least 12 months. If not, switch to paperless billing and set account reminders.

7. Using rent reporting services

Most rent payments do not appear on your credit report unless you take action. Some third-party services allow renters to report payments even if they are not on the lease, but success depends on landlord participation and reporting practices.

Try this: Sign up for a rent reporting service that integrates with your payment method and check which credit bureaus they report to.

8. Reducing regular expenses wherever possible

Lower monthly costs can help ease financial pressure, making it less likely you’ll miss a payment or carry a high credit card balance. Staying on a shared phone plan is one example, but any recurring expense you can trim may support better money management.

Try this: Review your regular bills and look for options to share, reduce, or eliminate costs that don’t need to be individual.

9. Turning a hobby into extra income

Earning a little extra money from a hobby or side gig can help you cover bills without leaning on credit. A modest income stream may allow you to pay down balances, avoid overdrafts, and make more consistent payments, supporting healthy credit habits.

Try this: Sell handmade items, offer a service, or teach a skill online. Use the extra income to cover at least one regular expense.

10. Opening a credit card for strategic use only

If you have limited or no credit history, opening a new card can help establish a positive payment record. Assigning it to one small recurring expense and paying it off monthly keeps your utilization low and adds to your credit file. It is important to manage the account responsibly.

Try this: If you are building credit from scratch, consider a secured or low-limit card and use it only for one predictable monthly charge.

The way you choose to live affects your credit

Building credit doesn’t always require major changes. In many cases, simple lifestyle choices, from automating bills to managing shared expenses, can help support responsible credit use. By understanding how daily decisions affect your credit profile, you can take steady steps toward better financial health over time.

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Think you’re doing fine financially? The Fed’s new survey says maybe not

Many Americans believe their finances are in good shape, but new data from the Federal Reserve suggests that confidence may be misplaced.

A closer look at the survey results offers a valuable reality check. It might prompt you to reassess how secure your finances really are and what steps you can take to improve them.

Only 51% of Americans are living within their means

One of the most striking findings from the survey is that only 51 percent of U.S. households reported spending less money than they earned in the past month. Another 30 percent said their spending matched their income. That leaves 19 percent who spent more than they brought in.

As concerning as that sounds, the 51 percent figure is an improvement from the previous year, when just 48 percent of households lived within their means. But even with that modest progress, the bigger picture remains troubling.

Spending exactly what you earn leaves no margin for error. One unexpected expense could push you into debt or force you to dip into savings. And for the 19 percent spending beyond their income, the situation is even more serious. They are either using up savings or relying on debt. Neither approach is sustainable over time.

Income plays a major role. While 66 percent of households earning over $100,000 said they were spending less than they earned, the national average is pulled down by those below that threshold. For households making under $50,000, fewer than 40 percent are living within their means.

How to close the gap

If your budget has no cushion for emergencies or future needs, it may be time for some tough decisions.

• Reevaluate your expenses. Somewhere along the way, spending has outpaced income. It is better to make changes now than to wait until circumstances force your hand.
• Find ways to earn more. Asking for a raise, switching jobs, or picking up extra work can be difficult, but the effort may provide the financial breathing room you need.

Perception versus reality

The Federal Reserve also found a disconnect between how people feel about their finances and what the numbers suggest.

According to the survey, 39 percent of respondents said they were “doing okay” financially. Another 34 percent said they were “living comfortably.”

That adds up to 73 percent who think they are in reasonably good shape. But if only 51 percent spend less than they earn, a significant portion may overestimate their financial health.

Access to credit can create the illusion of stability. As long as bills are being paid, some people assume they are managing, even if they are relying on borrowing. However, continued use of credit to cover basic expenses can lead to rising debt and declining credit scores. A weaker credit profile may limit access to affordable loans, housing, and other financial opportunities. This may help explain why household debt has continued to rise in recent years.

Time for a financial reality check

The risks are clear. Debt must eventually be repaid. As balances grow, interest costs rise, placing an even tighter squeeze on future budgets. To get a clearer picture of where you stand, consider asking yourself:

• When will you be able to stop borrowing?
• How will you repay the debt you already have?
• Can you afford future milestones such as buying a home, covering college costs, or retiring?

Answering these questions honestly may be uncomfortable, but it is a crucial first step toward getting back on track.

How households are falling short

The survey also uncovered other warning signs among U.S. households:

• Retirement savings are falling behind. Only 35 percent of respondents said they were on track with retirement savings. That means nearly two-thirds may be headed toward a reduced lifestyle later in life. Reviewing your retirement plan once a year and increasing contributions when possible can help you stay on track.
• Emergency savings are lacking. Just 55 percent of households said they had enough savings to cover three months of expenses. Among those earning less than $50,000, that number drops below 40 percent. Having emergency savings can protect you from needing to borrow in a crisis and can reduce the long-term financial impact of unexpected setbacks.
• Some homeowners are uninsured. Seven percent of homeowners reported having no homeowner’s insurance. This puts their most valuable asset at risk. If insurance feels unaffordable, it may be worth reassessing your housing situation to ensure it aligns with your financial reality.

Taking the first step toward stability

Stepping away from financial risk often requires difficult choices. But those choices are likely to be far easier than facing a future filled with mounting debt and uncertainty.

If you are struggling to find a way forward, consider reaching out for help. Nonprofit credit counselors, financial advisors, or trusted digital tools can help you assess your options and make a plan.

It is never too early to act, and recognizing the problem is often the most important step toward solving it.

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Technology and financial innovation are changing the way Americans handle money. Some of these changes provide consumers with more choices and better efficiency. However, some carry risks and additional costs.

The Federal Reserve Bank of Atlanta recently updated its annual Survey and Diary of Consumer Payment Choice. It tracks how Americans pay for goods and services, whether with cash, checks, credit cards or other methods. Looking at how these results have changed over time offers a clear view into the shifting landscape of consumer payments.

As new payment tools become more common, it is helpful to understand where they differ. Some come with added fees, slower processing or increased fraud risk, while others may offer speed or convenience.

How cash, debit, and credit card use have changed osince 2015

Cash is in decline, but far from dead

It’s probably no big surprise that cash is declining as a payment method. The surprising part may be that the vast majority of Americans still use it on some occasions. Cash was used for 14% of consumer financial transactions in 2024, down from 33% in 2015.

However, it’s not as if Americans have abandoned it altogether. The survey found that 83% of Americans had used cash within the past 30 days. That’s down from 87% a year earlier, but still represents over four out of five consumers.

Part of the decline in cash has been driven by the rise of online shopping and the growing prevalence of cashless venues for events like concerts and sporting events. In those cases, consumers don’t have the option of using cash. However, there are also positive reasons for moving away from cash, such as greater security, convenience and faster transactions.

Most people still find occasions to cash. Some of this may be prompted by the recent rise in surcharges on credit and debit card transactions. It pays to keep your options open.

Paper checks are fading fast

Americans have moved more decisively away from using paper checks. They represented just 2.5% of consumer payments last year, down from 6.5% in 2020.

But paper checks are not dead yet. They have a niche as a payment for large transactions. The average payment by paper check was $633 in 2024. The averages for cash, credit cards and debit cards were all under $100.

One thing that may discourage consumers from using checks is their vulnerability to fraud. Thieves often intercept checks in the mail, either when banks send checkbooks to customers or when people mail out payments themselves. “Check washing,” a process by which criminals change the information written on checks, has become a frequent problem. Also, modern photo editing software has made creating phony blank checks relatively easy.

If you still use checks, take steps to protect them. Avoid leaving outgoing checks in your mailbox for pickup. Instead, drop them in a secure mailbox or take them to the post office. If you order new checks, note the order date and contact your bank if they do not arrive within a reasonable timeframe.

Credit or debit? The battle for leadership

Credit cards are the leading method of payment used by Americans, followed by debit cards.

Debit card use has stayed steady over the past decade, accounting for 29.6% of transactions last year. That is nearly unchanged from the 29.5% share in 2015.

Over the same time, credit card usage has risen sharply. This has allowed credit cards to pass debit cards as the most frequent form of consumer payments. Credit cards represented just 18.3% of transactions in 2015, but this rose to 34.5% last year.

Some customers may prefer credit cards because they offer more fraud protection than debit cards. Also, credit cards are more likely to offer rewards. However, their growing use over the past ten years has coincided with a sharp rise in credit card debt. Some customers may prefer credit cards because they offer more fraud protection than debit cards. Credit cards are also more likely to offer rewards. However, their growing use over the past ten years has coincided with a sharp rise in credit card debt. Carrying a balance can lead to interest charges and late fees, and if payments are missed or maxed-out limits are common, it can also hurt your credit score.

According to the Federal Reserve Bank of New York, credit card debt has grown by 73% over those ten years. Allowing debt to accumulate like that is an expensive habit compared to paying with a debit card. With a debit card, you only spend money already in your bank account. So, there is no debt, no interest charges and no potential for late payment fees.

With credit cards, you borrow money whenever you use the card. You can escape interest charges if you pay the balance in full each month. However, many Americans don’t. This helps explain why credit card debt has risen as they’ve become a more popular alternative to debit cards.

Be wary of surcharges when paying bills

Whether you use a credit card or a debit card, watch out for surcharges. These fees are increasingly added to cover the vendor’s transaction processing fees.

While surcharges at restaurants get a lot of attention, they are even more common on certain types of bills. Government payments like taxes and fees often include surcharges, as do school, rent and utility payments. For these expenses, it may be worth using a different payment method, such as a bank transfer.

What consumer payment trends mean for your everyday finances

Payment methods will keep evolving, but the fundamentals stay the same. Know your options, weigh the risks, and choose the method that works best for your needs, not just what is most convenient. Understanding the pros and cons of each option can help you avoid fees, reduce risk, and stay in control of your finances.

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Hope for the best, prepare for the worst, is how the old saying goes. Lately, consumers seem to be doing the opposite.

The latest Survey of Consumer Expectations from the Federal Reserve Bank of New York shows that consumers expect economic trouble on multiple fronts. You’d never know it, though. Their borrowing and spending patterns show little sign of caution.

Many consumers appear to be bracing for economic trouble while continuing to spend and borrow with little visible adjustment. This contrast highlights a disconnect between expectations and behavior. That gap could increase financial risk if current concerns about inflation, income, and employment prove accurate, making it more important than ever to monitor your credit and protect overall credit health.

Expectations fall for income, jobs, and inflation

The survey found that consumers became more pessimistic about several aspects of the economy and their personal finances during the first quarter of 2025:

• Inflation expectations remained at an average of 3.6% for the year ahead, but rose by 0.2% for the next three years. That brought the three-year expectation to 3.2% a year, the highest level since mid-2022. That was about the peak of the post-pandemic inflation surge. This three-year expectation shows that consumers expect rising inflation to stick around for a while.
• The expectation that unemployment will be higher a year from now rose to its highest level since April of 2020. That was back when pandemic lockdowns caused massive layoffs.
• The median expected growth in household income dropped by 0.2% to 2.6%. That’s the lowest level since April 2021.

In short, households expect inflation to rise, their incomes to drop and the risk of job losses to increase. And that’s not all the bad news….

Consumer debt grows alongside missed payments

Inflation, slowing income growth and rising unemployment would be challenging under any circumstances. What makes them even more threatening is that consumers already have high debt loads and struggle to keep up.

Here are the latest statistics on this problem:

• Based on the Q1 2025 Household Debt and Credit Report from the New York Fed, total consumer debt has grown by 27% over the past five years.
• The fastest growth rate has been in credit card debt, typically the most expensive form of debt.
• Credit cards also have the highest percentage of balances with 90 days or more overdue payments. This percentage has been rising fast. It now stands at 12.31%, the highest in 14 years.
• The late payment problem looks like it might get worse. The Survey of Consumer Expectations found that the expected probability of missing a minimum debt payment in the next three months rose in the first quarter. It now stands at 13.9%, up from 10% just four years ago.

Spending outpaces both income and inflation

With household finances already strained by debt and expectations of a worsening economy, it would be reasonable to see signs of restraint. So far, that shift has not appeared.

Credit card debt declined in the first quarter of 2025, but that’s not remarkable. The first quarter of the year is when people pay their holiday shopping bills. Credit card debt has declined in the first quarter of 21 of the last 22 years (the only time it didn’t, it stayed level). However, credit card debt has risen steadily over those 22 years, from $700 billion to $1.182 trillion.

Significantly, consumer debt overall rose in the first quarter of 2025, so people are still borrowing. Based on their spending plans, they expect to continue borrowing. The Survey of Consumer Expectations found that households expect their spending to grow twice as fast as their incomes over the next year, and faster than the inflation rate.

So, despite having trouble paying for the debt they’ve already got, consumers are on track to take on even more.

Credit card debt dips in Q1 but remains elevated

The recent decline in credit card debt offers a modest sign of improvement. Consumers have reduced balances in 21 of the last 22 first quarters, suggesting that short-term discipline is possible.

Given that the New York Fed’s survey points to growing concerns about the economy, a more sustained effort to reduce debt could help households prepare for potential financial stress.

Time to align expectations with action

Consumers are not blind to the economic outlook. They see the possibility of rising inflation, falling income, and greater job insecurity. But so far, their financial decisions tell a different story.

Spending continues to rise, debt is growing, and delinquencies are increasing. That disconnect could leave many households vulnerable if economic conditions worsen. Now may be the time to match concern with preparation—by reducing debt, building reserves, and paying closer attention to credit health.

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Parenting brings deep rewards but also constant financial demands. From groceries and clothes to school supplies, everyday expenses can stretch a budget thin. That is before even factoring in major costs like paying for college.

In response, many parents turn to convenience services such as food delivery, ride shares, and online retail to save time. But these small conveniences may be quietly adding up and putting extra strain on household finances.

According to financial firm SoFi, the annual cost of raising a child is about $23,000. That represents over a quarter of the average household’s after-tax income. Of course, the burden becomes even heavier if you have multiple children.

As the cost of raising children continues to climb, many parents understandably turn to services that save time and reduce stress. Whether it is delivered meals or a quick ride across town, these small conveniences can offer real relief. Still, for families watching their budgets closely, it helps to step back and look at how much these services are adding to monthly expenses. A few small adjustments could go a long way toward easing financial pressure.

Study findings

A TransUnion survey compared how households with and without children use gig-economy services like food delivery, ride sharing, and online retail. The results showed that parents rely on these conveniences far more often and spend significantly more. Here’s how the numbers compare:

These figures suggest that the convenience gap between parents and non-parents comes with a real financial cost.

For households already working to stay on top of bills or manage debt, this extra spending can tighten margins even further. When budgets are stretched, it may become harder to make on-time payments or avoid high credit card balances. Both of these factors can affect your credit score.

How these services increase household costs

These results are understandable. Parents often turn to convenience services to save time and reduce daily stress. What matters is knowing how much that convenience actually costs over time.

Take the most popular category: food delivery. Prepared food is almost always more expensive than cooking at home. Then come the delivery fees, followed by a tip for the driver.

Based on the usage figures, households with children are about 50 percent more likely to take on these extra weekly expenses. That can be a meaningful addition to the family budget.

Other convenience services also add up. The individual charges may seem small, but over the course of a year, they can significantly affect your finances and make it worth reconsidering how often you rely on them.

How parents may be able to make life easier without overspending

Convenience is often a lifeline for busy families, and there is nothing wrong with finding ways to make daily life more manageable. But when money is tight, small changes can still help ease the pressure without sacrificing too much comfort.

• Meal planning. Planning between grocery runs can make mealtimes less stressful and help avoid last-minute takeout.
• Advance meal prep. Even prepping one or two meals in advance can make a busy weeknight easier. It is not about cooking everything from scratch; it is about making things easier when time and energy run low.
• Public transport. Public transport can be a lower-cost option for errands or commuting if it is available and safe. It is not always practical, but it is worth considering where it fits.
• Car pooling. Sharing rides with other parents for school or activities can take a bit of coordination, but it can also reduce costs and strengthen community ties.
• Free delivery options. Many retailers offer free delivery on larger orders or with memberships. Grouping purchases or ordering ahead can help you take advantage of these deals more often.

Planning ahead can ease future stress

Nobody expects parents to do it all without help. Sometimes, paying for convenience is the only way to get through the day. But being more selective about when and how you spend can make a big difference, especially if economic uncertainty lies ahead.

• Build a little breathing room. Small savings from delivery fees or service charges can add up to a modest buffer in your budget. That extra flexibility can help if income drops or costs rise.
• Tackle debt faster. Cutting back on non-essentials can free up money for credit card or loan payments. Reducing debt now gives you more control in the future.
• Strengthen your safety net. If your debt is already under control, redirecting spending into an emergency fund can provide peace of mind and help you handle surprise expenses.

Convenience will always be part of modern parenting. The goal is not to eliminate it but to ensure the help you pay for is worth the cost. That way, your money is there when you need it most.

Being more intentional with spending not only helps stretch your budget, it may also make room to pay down debt or avoid new borrowing. These habits may support better credit health over time, especially if they help you reduce balances or avoid missed payments.

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What is happening in May 2025?

Federal student loan payments officially resumed in October 2023, following a pause that began in March 2020. The U.S. Department of Education introduced a one-year on-ramp period, running from October 1, 2023, through September 30, 2024. During this time, missed payments would not be reported to credit bureaus, and borrowers would not be considered delinquent or placed in default. However, this protection ended on October 1, 2024. Since then, missed payments have been reported and borrowers have been at risk of falling into default.

In an April 2025 press release, the Department announced that active collections on defaulted federal loans — including wage garnishment and tax refund seizure — would resume on May 5, 2025. This marks the first time since March 2020 that such collections have been enforced.

What does it mean to be in default?

A federal student loan is considered in default when a borrower has not made a payment for 270 days. This can lead to serious consequences, including damaged credit, wage garnishment, tax refund seizure, and reduced eligibility for additional federal aid. Private student loans may have different default timelines and consequences, but the financial impact can be just as severe.

Borrowers in default often face barriers to accessing credit or qualifying for favorable loan terms. A default status appears on a credit report and can significantly lower a borrower’s credit score, potentially affecting their ability to rent housing, secure employment, or obtain insurance.

Who is most affected?

Although student loan default may be associated with recent graduates, many borrowers in default are older adults. According to Education Data Initiative, the average student loan debt among borrowers aged 35 to 49 is over $43,000, and this group carries one of the highest default rates. Defaulted borrowers are often juggling family expenses, mortgage payments, and other forms of debt.

Many of these borrowers are already under financial strain from inflation, rising interest rates, or job instability. Conditions that have only intensified since repayments resumed. With the protections of the on-ramp period now expired, the risk of involuntary collections steadily increases.

How might collections be enforced?

Defaulted federal loans may now be subject to involuntary collection actions, including:

• Wage garnishment. Up to 15 percent of a borrower’s disposable pay may be withheld.
• Tax refund offset. The federal government can withhold tax refunds to cover defaulted loans.
• Social Security benefit reduction. Up to 15 percent of benefits may be taken to repay federal student debt.

For borrowers who have not taken steps to resolve their default, these actions may resume with little warning.

How can borrowers get out of default?

Avoiding or ending collections is often a top priority for borrowers in default. Depending on the loan and individual circumstances, there may be ways to resolve the default and stop or prevent wage garnishment, tax refund offset, or other consequences. Possible options include:

• Loan rehabilitation. Borrowers may qualify to make nine reduced, on-time monthly payments in a ten-month period. Successful completion removes the default from their credit history, though late payments will remain.
• Loan consolidation. This allows borrowers to combine one or more federal loans into a new loan, immediately removing the loans from default if they agree to an income-driven repayment plan.
• Income-driven repayment (IDR) plans. These may offer lower monthly payments based on income and family size. Enrollment in an IDR plan may help prevent future delinquency or default.

Borrowers should carefully compare these options. Rehabilitation can only be used once, while consolidation may offer faster relief but does not remove the record of default from credit reports.

How might default affect credit scores and access to credit?

When a federal student loan goes into default, the missed payments and any collection activity are typically reported to the major credit bureaus. This can lead to a significant drop in a borrower’s credit score, especially if the default is not resolved quickly. Lower scores can make it more difficult to qualify for new credit, and may result in higher interest rates or less favorable loan terms.

If credit has been affected, monitoring it regularly can help borrowers track any changes, dispute errors, and detect signs of identity theft. Some credit monitoring tools also show how actions like loan rehabilitation or consolidation might influence a credit score over time. Some services may also offer alerts or tools to simulate how actions like rehabilitation or consolidation could affect credit scores.

Where can borrowers find help?

Student loan borrowers in default may benefit from contacting their loan servicer or the U.S. Department of Education to explore available options. Free assistance is also available through:

• Federal Student Aid: Default
• National Consumer Law Center
• Consumer Financial Protection Bureau

Borrowers are wise to avoid debt relief companies that charge upfront fees or make unrealistic promises. Legitimate help is available at no cost through federal resources and nonprofit organizations.

What to consider moving forward

Defaulting on a student loan can have long-lasting financial consequences, but taking informed steps may help borrowers regain stability. It may take time to rebuild credit and reduce debt, but resolution options like rehabilitation and consolidation could offer a starting point.

Understanding how default affects credit and financial opportunities is essential for anyone facing collections in 2025. Staying informed, monitoring credit, and seeking trusted guidance may support long-term recovery.

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The Gross Domestic Product (GDP) of the United States declined at an annual rate of 0.3% in the first quarter of 2025. Coming at a time when people were already anxious about the impact of new tariffs and federal budget cuts, this drop in economic activity sparked serious concerns about where the economy is headed.

Any decline in GDP is unwelcome news. However, things would need to worsen significantly for this to qualify as a recession. Still, it might be wise to start preparing.

Certainly, any decline in GDP is not good news. However, things would have to get much worse for this to be considered a recession. Still, it wouldn’t hurt to take some steps to prepare.

Economic contractions are rare but not always recessions

Economic expansions occur when the economy grows, and contractions happen when it shrinks. These changes are measured after adjusting for inflation. In other words, the economy must grow faster than the inflation rate for it to count as an expansion. This inflation-adjusted growth rate is often referred to as the “real” rate.

Declines in economic activity have been rare since the end of the Great Recession

News that the economy shrank at a real annual rate of 0.3% raised concerns about a possible recession. That reaction stems, in part, from the rarity of contractions in recent years. Since emerging from the Great Recession in mid-2009, the U.S. economy has experienced only seven quarters of decline out of 63 — that’s just 11% of the time.

The rarity makes the latest decline unsettling, but one bad quarter does not constitute a recession. In fact, contrary to popular belief, even two consecutive quarters of economic contraction do not automatically meet the definition.

Defining a recession

The National Bureau of Economic Research (NBER) defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” That means three key conditions must be met:

• The decline must be meaningful.
• It must be widespread across different sectors.
• It must be sustained and not just a routine fluctuation from one month or quarter to the next.

The NBER intentionally keeps the definition somewhat subjective because, in some cases, one factor may outweigh the others. For instance, when the COVID-19 pandemic hit the U.S. in early 2020, the economy contracted for just two months, but by over 30%. That brief but dramatic downturn was enough to be considered a recession.

As for now, the 0.3% decline in the first quarter of 2025 is neither deep nor prolonged enough to count as a recession, at least not yet. Whether it becomes one depends on what comes next.

Mixed signals create uncertainty

Further complicating the picture is a stream of conflicting data. While GDP dipped, the decline was mild. April 2025 saw employment gains, though growth slowed compared to the previous month. In addition, earlier job growth estimates for February and March were revised sharply downward.

Consumers, who drive roughly two-thirds of U.S. economic growth, are also sending mixed messages. Consumer spending has risen over the past two months, yet consumer confidence has dropped for four months in a row. One explanation for this disconnect is that much of the recent increase in spending came from motor vehicle purchases. Concerned about potential tariffs, some consumers may be rushing to buy now, possibly leading to slower sales later and increasing recession risk.

So far, the economy is not in a recession. But there are enough warning signs to justify caution.

What happens in a recession and how to respond

To understand why people worry about recessions, it helps to consider some of the common consequences:

Unemployment typically rises

• What happens: As business slows, companies often cut jobs. Hiring is typically slow to resume even after the recession ends. The Great Recession began in January 2008 and ended mid-2009, but net job losses continued until February 2010. More than 8 million jobs were lost, and national employment did not return to pre-recession levels until May 2014. Many Americans faced prolonged joblessness.
• What to do: Reduce expenses and build emergency savings if possible. Evaluate how secure your job is, and consider whether you can improve your skills or transition to a more stable employer.

Credit becomes harder to get

• What happens: Job losses often lead to missed debt payments and lower credit scores. At the same time, lenders grow more cautious and tighten lending standards. The result is that fewer people qualify for credit.
• What to do: Strengthen your credit score now. Pay down debt, avoid taking on new credit unless necessary, and create a budget that fits your current income. Get a complete view of your credit score for free.

The stock market gets volatile

• What happens: Economic troubles often hurt the stock market, but not always in obvious ways. Investors tend to act in anticipation of events. That means markets may start falling before a recession is confirmed and start recovering before it ends.
• What to do: Avoid drastic reactions. By the time a recession is officially recognized, the worst may already be over for markets. Instead, rebalance your portfolio if needed and stay focused on your long-term investment goals.

Practical steps for uncertain times

Staying prepared is more helpful than trying to predict the future. A single quarter of decline does not mean a recession has begun, but it is a reminder to take stock of your finances. Focus on steady, practical actions that can strengthen your position. Build up your savings, keep your credit in good shape, and avoid taking on new risks without a clear plan. These habits can help you stay steady, even if the economy becomes more difficult in the months ahead.

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