“More Americans are racking up credit card debt as inflation pushes up the cost of food, utilities and other staples,” CBS News reports. “60% of credit card holders have been carrying balances on their cards for at least a year, up 10% from 2021.”
With inflation higher than it has ever been (and when do salaries ever keep up?), credit card usage in increasing. Biden says inflation was 0 last month but even if that were true, it wouldn't erase the rise in prices that have already occurred. If I were to give one piece of economic advice, it would be to avoid carrying debt on a credit card if at all possible. Interest free promotional rates are fine as long as you pay back the balance in the allotted time as is using credit cards for their cash back rewards as long as you pay the balance at the end of the month. But carrying a balance on one is one of the worst things you can do economically speaking.
How is this the government's fault you might ask? Well, government spends about 40% of GDP which means that, more or less, they control 40% of the economy. In addition, other decisions they make (for example, policy decisions regarding COVID, regulations, taxes, etc.) impact costs greatly. This is specifically in the U.S. but the same is true in most other countries as well and in many cases I suspect governments control even larger portions of the economy.
The problem with credit cards of course is the high interest rate. Even if you have very good credit (and if you are carrying much in the way of credit card debt it probably isn't THAT good) interest rates are typically very high. Rarely below 20% and often higher. That's as much and usually more than you earn for saving HBD!
To make matters even worse, it seems that credit card companies have increased their fees to vendors recently. Many places have started charging a fee to use a credit card which makes them even more expensive to use and more than negates any rewards. If you currently use your credit card to pay bills, at the dentist, or even at many retailers, read the fine print or look for a sign by the cash register. Very often it isn't "free" to use a credit card any longer. If you are already struggling with credit card debt, paying extra fees every time you use one isn't going to help.
Source: How the Government is Causing a Credit Card Debt Crisis - Foundation for Economic Education
