Credit Card Nation
Increasingly Americans are just saying "charge it!" This has resulted in America becoming a Credit Card Nation racking up $1.13T in credit card debt. The timeline to the run-up in credit card debt overlaps almost perfectly with the run-up in consumer prices. This author has argued for some time that the "truflation" consumers bear is most likely around +50% over the past 5 years.
With prices up so high and wages stagnant as a forest mushroom, the consumer has been forced to put purchases on the proverbial "loan shark in their wallet" to help cover expenses. By-and-large, the greatest costs borne have been in terms of housing, food, and energy...especially over the past 3 years when inflation has spiked sky high.
Given the rate of growth in debt, it is going to be nearly impossible for many people to EVER pay off their credit card debt. Especially when the usury rates are almost at 30%. It becomes a vicious cycle punishing people repeatedly for a purchase made on a credit card. Obviously it also punishes the poorest in our country as well because the rich pay off their balances monthly.
A strong, prudent man from Delaware, where the largest credit card companies are incorporated, sure could make a difference. Perhaps the Consumer Protection Bureau could look into the favorable deals given to credit card companies so they can charge so much interest? Who is on the dole? And why?
Barring some inclusive and diverse help, there will be a greater rate and dollar amount of defaults in the coming months. Ultimately consumers will slow spending or risk having the spigot of cash turned off. The upside? The dollars you owe today are worth less than the dollars you spent yesterday.