Ilaria D’Anca, 44, of Mesa, Arizona, felt as if she had everything going for her with a graduate degree in advertising and public relations, with honors. She worked 20 years as a health care executive, earning as much as six-figure salaries for half of those years.
But from 2016 to 2019, she endured a rough patch that included a career change, an unprecedented flooding of her home and property, a legal battle and a falling out with family members that depleted her savings.
“I had an 806 credit score and nearly $150,000 saved in bank accounts prior to this financial crisis,” she said. “I went through every penny of it. We had three vehicles repossessed and lost our home to foreclosure.”
She said “bad financial products” worsened her situation. “Before this experience, I had no idea of the existence of these. I had three traditional mortgages and government-backed school loans prior.”
When you’re down and out, the last thing you need is another blow to the knees. But that’s exactly what an increasing number of Americans, including those in the middle class, say they feel when they need access to short-term cash.
To cover unexpected medical bills, car repairs or other surprise expenses, Americans living paycheck to paycheck often turn to expensive short-term loans that can further erode their finances, according to community finance platform SoLo’s 2025 Cash Poor Report. Americans paid more than $39 billion, or 34% more than in 2023, in fees to borrow money to pay their unexpected expenses, SoLo said. Fees were on top of the advertised annual percentage rate (APR), which often already reaches into the 20% range and higher for credit cards, it said.
Cash-poor Americans, or those who don’t have enough liquid cash on hand to cover unplanned expenses, often used some of the following to cover the average $1,825 emergency last year, it said.
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Subprime credit cards. This is the most expensive option, with an average cost of 48%, up from 41% in 2023. Maximum fees can reach 90% of the principal borrowed, driven by high total fees, penalties and monthly maintenance fees.
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Payday loans. The average cost is 35%, up from 33% in 2023. Maximum costs reached 67%, fueled by origination fees, late fees and penalties.
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Buy now pay later, or BNPL. This is a relatively affordable option that allows people to pay in installments. It has minimum fees averaging just 2%. However, costs can climb to 45% with interest and additional fees.
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Earned wage access, or EWA. Tapping into your earned wages before payday has one of the lowest average borrowing costs at 13%, but fees can rise to 26% if including optional tipping and transaction charges.
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Bank small-dollar loans. Growing in popularity, these loans are for typically less than $1,000 and are repaid in a few weeks or months. Average borrowing costs were 25% in 2024, with a minimum fee of 12%, mostly because of mandatory account balance and deposit requirements.
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P2P, or peer-to-peer, loans. These are the most affordable option in terms of aggregate borrowing costs, but average costs can reach 17% because of tips and late fees.
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Friends and family. Forty-three percent of people surveyed borrowed from friends and family last year. That’s up from 38% in 2023. These loans generally have no fees.
D’Anca had her first taste of these short-term, high-interest loans when her pickup broke down.
“They (lenders) were willing to pay my $2,200 bill for the truck’s fuel pumps, but I had to pay it back in full within three months, or the interest would go from 0% to 169% with the back three months of interest due immediately,” she said. “Let me tell you, I believe most Americans would take the bad loan over being stuck in a parking lot indefinitely. So, I did.”
In the end, the repair on the truck was faulty and caused it to not pass emissions. “We sold it at bottom-dollar and had only an $1,100 down payment for another vehicle,” she said.
Single mom Tenisha James, 47, of Waterbury, Connecticut, has had a similar experience. She has always had at least a full-time job but still couldn’t make ends meet. She’d miss payments while waiting for her paycheck to clear. Late fees and interest would accrue and end up swallowing most of her money, preventing her from ever making headway.
She tried credit cards and considered payday loans, but everything seemed impossible to pay off, she said.
James finally settled on EarnIn, an EWA company, which allowed her to “pick myself up out of debt by paying bills on time,” she said. “I got caught up and didn’t have to pay late fees anymore,” which allowed her more money to pay down debt.
EWA companies all operate a little differently, she warned, so people should research them to choose one that works for them. Some charge fees or allow you to tap only small amounts of money until you build a history with them and earn points. Others ask for optional tips or donations.
“Even if I have to pay a fee of $4.95 to get my money faster and use it four times, that’s $20,” she said. “That’s still half of the late fees I would pay anyway. So, I’m still saving, and I can put that money toward something else.”
The irony, though, is Connecticut has implemented regulations that effectively restrict EWA, which had become her lifeline, James said. She created a Facebook page, Earned Wage Access 4 CT, and a petition urging legislators to reverse the regulations. Meantime, she's back to struggling to pay her bills on time.
Paycheck-to-paycheck living is often associated with working-class Americans, but many middle-class Americans, including those with college degrees, those who own homes, people who are investors, and those who have six-figure incomes are also “cash-poor,” SoLo said in its survey of 2,000 adults. One in 7 cash-poor Americans make more than $75,000 a year, it said.
More than half (54%) of cash-poor Americans are women; two-thirds are millennials or Gen X. Gen X is made up of those born between 1965 and 1980, while millennials were born between 1981 and 1996, SoLo said.
Forty-percent, like James, work full time, and 14% are Black Americans, SoLo said.
“Being cash-poor is a way of life for most Americans," said Rodney Williams, president and co-founder of SoLo. "This creates vulnerability in being able to manage variable and unplanned expenses.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
This article originally appeared on USA TODAY: Odds are against those living paycheck to paycheck. How two are trying
