One Fifth of Americans Have Maxed Out Their Credit Cards

Grocery prices have jumped by 25 percent since the onset of the covid-19 pandemic, while home prices have jumped by 47 percent. Such rampant inflation is squeezing budgets across the nation and prompting many to run up their credit card balance.

According to the New York Federal Reserve’s “Quarterly Report on Household Debt and Credit,” nearly 1 in 5 Americans have maxed out their credit cards. This indicates that well over 40 million people are living beyond their means and running out of additional lines of credit to rack up.

No savings: The United States savings rate fell to 3.2 percent in the first quarter of this year, and fewer than half of Americans have enough savings to cover an unexpected $1,000 expense. Continuing inflation will likely force more people to either reduce their standard of living or face bankruptcy.

Since the federal government refuses to cut its own spending, the Federal Reserve will likely have to keep interest rates high to prevent the return of 9 percent inflation. So borrowing money will remain expensive.

What to do: Dealing with inflation requires smart budgeting. To learn how to do this, read our free booklets Solve Your Money Troubles! and The Financial Law You Can’t Afford to Ignore.