As inflation continues to worsen and Americans struggle to maintain their lifestyles, many have turned to credit cards for everyday expenses. The holiday season only exacerbates the issue, with millions feeling the pinch in their spending.
According to reports from major banks, credit card spending rose significantly in the third quarter. JPMorgan Chase reported a 9% increase while Wells Fargo’s rose 15%. A concerning trend, credit card loans or unpaid balances on accounts also jumped nearly 16% at JPMorgan Chase in the same period compared to the previous year.
Financial experts point out that Americans are using credit cards for necessities like food and college tuition, and are even tapping into their retirement funds to make ends meet. “We’re now seeing a lot of people even tapping into their retirement funds,” says personal finance expert Lynnette Khalfani-Cox. “We’ve seen a lot of data showing that some people are either taking emergency or hardship loans from their 401k or their 403b plans on the job or that they’ve just outright taken loans from their retirement funds, which is another indication that they’re using up their savings.”
Aside from the holiday season, inflation is driving up prices on everyday items like groceries, rent, electricity, and gas. This has made it more difficult for individuals and families to meet their financial obligations without relying on credit cards.
The overarching concern with this trend is that individuals may be unable to pay off their credit card balances. Experts worry that consumers may become trapped in a cycle of debt, as they take on more and more high-interest debt to meet their basic needs.
As the economy continues to fluctuate, many families find themselves struggling to maintain their lifestyles. Credit cards have become a means of survival, but they also come with risks. Financial education is more important now than ever, and experts urge individuals to take steps to protect themselves from falling further into debt.
