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SINCE KAMALA HARRIS' LAST PRESS CONFERENCE

Rise in credit card debt forecasts "overall economic meltdown"

"We are in a recession with stagflation, wages went up, but when corporate profits start to fall we are going to see job cuts." This will lead to the "overall economy crashing.”

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Published by
Verónica Silveri Pazos

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High inflation is increasingly affecting the finances of middle-class households, and many people are turning to credit cards to compensate for rising prices relative to their salary or earnings. A Primerica survey revealed that 75% of middle-income Americans said their incomes are falling below their cost of living.

In addition, 37% of respondents reported to have acquired more debt on their credit cards, the highest rate since the leading provider of financial services in the U.S. and Canada began tracking the data. According to its Chief Executive Officer, Glenn J. Williams:

We are seeing an increasing reliance on credit with many middle-income families reporting that their credit card debt has increased recently (...) The financial stress caused by rising credit card balances is also causing more families than ever to make only the minimum payments on their credit cards

Increased use of credit cards

A VantageScore analysis noted that credit card balances in October averaged about $5,600. This reflects a progressive increase of 0.8% month over month.

Poor economic conditions, coupled with the Federal Reserve raising interest rates several times this year, mean more debt for citizens. The average interest rate on credit cards is 19.49%. In the words of Captjur's CEO, Bob Bilbruck:

When consumer credit card debt increases, it is usually a good sign that we are heading for trouble in the economy, similar to what happened just before the 2008 recession (...) We are seeing this again now.
We are in a recession with stagflation, wages went up, but once corporate profits start to fall (probably in the next two quarters), we are going to see job cuts, which will lead to more credit card debt and then the overall economy crashing.

Cutting costs

The use of credit cards is one of the many ways consumers weigh rising costs. The survey points to the following other ways Americans are changing their spending habits to make ends meet in times of inflation:

- 75% cuts out non-essentials.

- 47% cut back or paused saving.

- 43% delayed regular maintenance of their car or home.

- 34% pulled from their savings.

Another strategy consumers use to make ends meet was to take on an additional job. Thirty-eight percent of respondents, including retirees, said they planned to do additional work.

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