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Americans Are Increasingly Turning To Credit Card Debt And Short-Term Loans As The Cost Of Living Becomes Extremely Painful
Francesco Abbruzzino, The Uncensored Report, LLC
The “American Dream” is not as affordable as it once was. In fact, tens of millions of Americans are having a really difficult time even affording the basics these days. As you will see below, an increasing number of people are turning to credit cards and high interest short-term loans just to pay for essentials such as food. Thanks to a very long series of exceedingly foolish decisions by our leaders, we are now facing a historic inflation crisis. As a result, the cost of living has been absolutely soaring in recent months. Of course the vast majority of Americans have not also seen their incomes soar, and so our collective standard of living has been steadily diminishing. Unfortunately, this crisis isn’t going to be over any time soon, and so that means that American families are going to be squeezed tighter and tighter as we head into 2023.
When you are barely scraping by from month to month, it can be really tempting to turn to credit cards for relief.
And that is precisely what has been taking place.
This week, we learned that credit card debt surged at the fastest pace in 20 years during the second quarter of this year…
The Federal Reserve Bank of New York reported that credit card debt held by U.S. households surged by 13% on an annualized basis in the second quarter, representing the sharpest climb in over 20 years. A recent study by Wells Fargo found that Americans also rely on credit card rewards to offset everyday expenses.
“When it comes to credit card spending over the past couple of years, we have seen categories shift on where people are spending their money and right now our top categories are grocery and gas,” said Krista Phillips, Wells Fargo executive vice president and head of branded cards and markets.
It is a really bad idea to pile up credit card debt just as the U.S. economy is entering a major downturn.
But most people are not interested in such warnings.
High interest “buy now pay later” loans are even worse, but their popularity is absolutely exploding right now…
But when credit cards are maxed out, some consumers go to BNPL loans as a way to bridge the gap, according to a Harvard study from earlier this year showing that the industry is booming with a particular draw to consumers earning less than $50,000 annually and those with sub-prime credit scores.
According to the New York Times, “buy now pay later” transactions are triple what they were just two years ago, and food purchases are an area of “significant growth” for the industry…
The New York Times reported that $45.9 billion in BNPL transactions were made in the U.S. last year, which is a three-fold increase from 2020. While food only accounted for 6% of those purchases in 2021, stats provided by the companies indicate significant growth in that arena.
When economic conditions turn really sour, those that have gotten deep into this type of debt will be really sorry.
But I can understand why they are doing it.
All of us have to feed our families, and a single cart of food can now cost as much as a really cheap used vehicle did in the old days.
Earlier today, I came across an article on Zero Hedge that really caught my attention…
However, in actuality, inflation and the budgetary issues it is causing in U.S. households, is resulting in “infighting” amongst families, according to the Wall Street Journal.