Earlier this year, while discussing the state of the U.S. economy, a top economic advisor to President Trump said that “credit card spending is through the roof.” The director of the National Economic Council added that Americans are “spending more on gasoline, but they’re spending more on everything else, too.”
Critics were quick to point out that many people use credit cards to pay for gas and other everyday expenses when they don’t enough money available to cover the cost of them. When credit card bills aren’t paid in full each month, interest accumulates – sometimes accompanied by late fees. These can add significantly to one’s overall cost of living.
A “coping mechanism to make ends meet”
An analyst with the Achieve Center for Consumer Insights says that, “Rising credit card usage does not signal financial strength. For many, it’s a coping mechanism to make ends meet. Increasingly, we’re seeing Americans rely on revolving debt not for discretionary spending, but to manage the rising cost of everyday necessities.”
The organization reported this year that over half (53%) of the people it surveyed are using their credit card balances for essential expenses. Some 57% of the consumers surveyed said they anticipated carrying these and other unsecured and short-term debts for at least six months as they struggled to keep up with rising costs.
The Achieve analyst notes, “Credit card spending can look strong on the surface, but the underlying question is what consumers are actually putting on those cards. For many households, higher balances are less a sign of economic optimism and more a sign that wages and savings are struggling to keep pace with essential expenses like groceries, utilities and housing.”
If the money you have coming in isn’t keeping up with your cost of living, you’re likely not in a position to pay off your credit cards balances on the payment due date any more than you were to pay for your purchases when you swiped your card or input your number online weeks earlier.
If credit card debt is overwhelming you, it’s smart to look at all of your potential options sooner rather than later. Getting legal guidance can be well worthwhile when it comes to finding a viable way forward.
