Why you should not put charges on your credit card amid today’s high inflation

Americans’ credit card debt is sitting at an incredible $887 billion as of June 2022, according to recent data from the Federal Reserve Bank of New York.

That is an increase of about 5.5% from the first quarter of the year — and a 13% increase from the year-ago period. 

Yet even that stunningly high number does not appear to be scaring some people away from credit card use.

Amid today’s high inflation, many Americans are continuing to pile up credit card debt as a way to cover their expenses and pay their bills.

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Personal financial pros warn against this.

“I get it — first [we had] a pandemic and now record inflation,” said Rachel Cruze, financial expert, New York Times No. 1 bestselling author and host of “The Rachel Cruze Show.”

She’s also a Ramsey Solutions professional and a daughter of Dave Ramsey.

Rachel Cruze

Rachel Cruze said “a lot of people are struggling to cover expenses that they could afford even just a few months ago.” However, she added, “a credit card is not the answer.” (Ramsey Solutions / Fox News)

“And I am seeing that a lot of people are struggling to cover expenses that they could afford even just a few months ago. And that is a scary place to be,” Cruze told FOX Business this week. 

Yet, “regardless of where you are financially, a credit card is not the answer,” said Cruze. “Especially when it comes to living expenses.”

“When you use credit for everyday items and expenses, you risk spending way more than you would with cash.”

Cruze pointed out that “when you use credit for everyday items and expenses, you risk spending way more than you would with cash.”

“And that debt can easily stack up quicker than you intended.”

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Cruze offered words of wisdom and of common sense.

“I want people to know that living — even right now — without credit cards is possible.”

Here’s how.

credit card

Financial expert Rachel Cruze says living “without credit cards is possible” during these tough economic times. (iStock / iStock)

3 smart tips to reduce your use of credit cards

“Personal finance is 80% behavior and only 20% head knowledge,” said Cruze.

1. “So, breaking the habit to swipe a credit card is step one. Take debt off the table.”

2. “Then, get on a zero-based budget and cut where you can while looking for ways to bring in more income,” she said. “Remember, these are short-term sacrifices.”

3. “Third, live on less than you make,” said Cruze.

“This is another behavior change,” she said. “You’re deciding that you’re not going to ‘buy’ what you can’t pay for right now. This may mean buying different items or shopping at different stores, but it will be worth it.”

Still not convinced that using credit cards to pay everyday household expenses is not wise?

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The average credit card rate has reached its highest point in decades, according to a recent survey from Bankrate.com — and it could go even higher.

credit card use

Financial expert Rachel Cruze says “regardless of where you are financially, a credit card is not the answer.” (iStock / iStock)

Bankrate found in early September that the average credit card rate hit a record high of 17.96%.

That rate was up 3.5% from roughly a month ago and up 10.8% from a rate of 16.21% about a year ago, according to Bankrate.com.

In addition, “Federal Reserve Chairman Jerome Powell has made it clear that the Fed is not done raising rates — not by a long shot,” said Ted Rossman, a senior industry analyst at Bankrate.com, in a statement accompanying the Bankrate findings in early September.

Megan Henney and Aislinn Murphy of Fox News Digital contributed to this report.

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