Credit card usage to pay for basic expenses rose among households in December as stubbornly high inflation erodes Americans' savings and purchasing power.
Strategic Wealth Partners investment strategist Luke Lloyd discusses the impact of the latest inflation report on markets and the crytpo collapse amid FTX's bankruptcy filing.
A growing number of Americans are relying on credit cards to pay for basic expenses as relentless inflation erodes more households' purchasing power. this week found that more than 35% of households used credit cards or loans in December to assist with spending needs in the past week. That marks an increase from 32% in November and just 21% in April 2021, according to the Household Pulse Survey.
The rise in credit card usage is somewhat concerning because interest rates are astronomically high right now. The average credit card APR, or annual percentage rate, set a new record high of 19.14% last week, according to a Bankrate.com database that goes back to 1985. The previous record was 19% in July 1991. If people are carrying debt to compensate for steeper prices, they could end up paying more for items in the long run.
"Credit card rates are much higher than most other forms of debt," Bankrate.com analyst Ted Rossman said. "We’re talking three, four or even five times higher than most people are paying for mortgages, car loans and student loans. Paying off your credit card debt should be a top priority, especially with interest rates at record highs.
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