There’s been a lot of talk about record-breaking inflation, but the latest indicator of concern for financial institutions – pointing to a possible medium-term recession involves credit cards.
The latest data shows Americans owed $887 billion in credit card debt as of the second quarter. That’s a 13% increase from the previous period.
Worse yet, the same data shows that 60% of Americans who earn less than $50,000 per year are carrying a credit card balance month-to-month.
Experts say the time is now to reduce that debt load as quickly as possible. The feds increasing interest rates will continue having an impact on everyday borrowers who are using credit cards to pay for essentials.
FingerLakes1.com recently spoke with a Marion resident, who shared their frustration about the cost of practically everything.
“Using a credit card for minor expenses or everyday expenses wasn’t standard before,” Rachel Smith explained. The 34-year-old has two children. “Just the bare bones cost at the grocery store has increased $40 to $50 per visit, I’d say. Gas prices are also a lot higher.”
Utility companies are warning that home heating prices may also be significantly more expensive this winter.
Credit counselor Karyn Rando recently told 13WHAM-TV that the average consumer is spending upwards of $400 per month on essentials. “We’re seeing more people take out credit cards over the last year to supplement their income to pay for those living expenses they can no longer afford, and now they’re struggling to make those payments on those credit cards,” she explained.
Experts and consumers agree: It’s a tough combination, and a trend that likely cannot be maintained for long.