A new report has found that with inflation and high-interest rates taking their toll on Americans, many have been forced to rely on credit to pay for their everyday expenses.
The report from The Guardian cited several Americans in different situations who are struggling with the current cost of living and are relying on their credit cards to get by.
“Now, because prices have gone up dramatically – for bread, gas, everything – I run out of money each month, so I end up paying for necessities with my credit card. This has been going on for at least six months. I’m so worried,” Robin, a 70-year-old retired teacher from California, shared with the outlet. “How will I ever pay this back when everything costs more and more?”
Another person who spoke with the Guardian, Kenneth, a 42-year-old apartment maintenance man from Fayette, Alabama, shared that relying on credit and loans is a vicious cycle, as high interest rates create more debt.
“If you have to borrow money and can’t get it from a bank, you are going to pay interest rates at 35%, and that’s just ridiculous,” he shared. “I took out a loan for $2,000 for 24 months, and I have to pay back over $4,000.”
While it may be shocking, this experience has been ongoing for some time, with a report from The Financial Times in March showing that credit card debt has increased by 50% since President Biden took office.
Another report from last month by WalletHub showed that 59% of people say they have more credit card debt than they did 12 months ago. Most people (54%) said inflation contributed to their credit card debt.
In February alone, US consumer borrowing rose by $14.1 billion, driven mainly by the largest increase in credit card balances in three months.
Additionally, current key interest rates of 5.25% to 5.5% — a 25-year high —have forced Americans to spend more on the money they are already borrowing to make ends meet.
“If the Federal Reserve would lower the interest rates, I’d at least be able to pay less interest on my debts,” Robin shared with The Guardian. “It’s so stressful, and lots of people are in this situation.”
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However, with inflation not falling below the central bank’s goal of under 3%, rates appear to be staying put, with the Fed saying Wednesday a cut wasn’t on the horizon.
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