4 in 10 Americans Facing Extraordinary Tax, Medical or Auto Payments Annually

4 in 10 Americans Facing Extraordinary Tax, Medical or Auto Payments Annually

February 9, 2017         Written By John H. Oldshue

New data from JPMorgan Chase found that 40% of American families will have to make an extraordinary tax, medical or auto repair payment each year. These costs average $1,500. All of this adds up to a $1,300 swing in monthly expenses–the equivalent of one month’s rent or mortgage payment.

Coping with Costs: Big Data on Expense Volatility and Medical Payments, which examined data from 250,000 Chase checking accounts from January 2013 to December 2015, is the third in a series of reports from JPMorgan Chase. This newest report found medical payments are common during tax season (March and April) and coincide with a 4% increase in income. Even though families are acquiring over $900 in liquid assets, often in the form of tax returns, it is taking a year to recover from these major medical payments. A full twelve months after the medical payment, savings are still depleted for nearly half (48%) of families, and credit card debt is staying elevated for 33% of families.

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“This could be the most granular look at families’ financial volatility we have ever seen,” said Diana Farrell, President and CEO at JPMorgan Chase Institute. “Even with more money in their pocket from tax refunds, the strain of major and unexpected medical costs are hitting families hard and making it difficult for them to recover.”

Other key findings of the report include:

  • Expenses fluctuate by nearly $1,300 on a month-to-month basis, which is equal to $7,391 per year. Discretionary expenses are even more volatile than non-discretionary expenses. While non-discretionary expenses only fluctuate 28%, or $735, discretionary expenses fluctuate 56%, or $514.
  • Expense volatility stays about the same–no matter your age. In fact, after the age of 60, even though older adults have a decrease in income volatility, they show the same or higher levels of expense volatility.
  • Of those who experienced extraordinary medial, auto or tax payments, one in ten had more than one extraordinary payment in a given year. One in six families (16%) made at least one major medical payment, and 3% made two or more. Older Americans were most likely to face an extraordinary payment. In families with adults 65 and older, 44% made at least one extraordinary payment compared to 22% of adults under 25.

The information contained within this article was accurate as of February 9, 2017. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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About John H. Oldshue

John Oldshue is the creator of LowCards.com. He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for LowCards.com.