Why Are Credit Card Balances So High?
July 23, 2020
Over the past two decades, Americans have seen the rise in credit card debt across all financial backgrounds. Gone are the days when only the “rich” carried cash and those struggling paycheck to paycheck used credit cards to pay for things. No, according to Experian, in 2018, an estimated 75% of Americans rely on credit cards to make all their purchases. It is forecasted that by 2021, cash will represent 11.2% of the U.S. GDP. The rise in credit card usage attributes to high credit card balances.
With 75% of Americans using credit cards for all of their purchases, it is no wonder why credit card balances are so high. People make house payments, car payments, and utility payments on top of grocery payments, clothing purchases, eating out payments, and all other purchases on credit cards. These payments add up to massive credit card balances!
The use of credit cards requires an extreme amount of discipline if you want to avoid debt. If you plan on using a credit card for all of your purchases, you will want to take some steps to keep your spending within reason.
- Create a budget. You only have so much money coming in each month, and you need to create a budget that allocates how much money you have to spend and where it goes.
- Stick to your budget. If you are looking to get out of debt or trying to avoid debt, you must choose to stay within your budget.
- Track your spending. If you are going to use a credit card for all of your expenditures, you must track your spending. Keep up with all receipts, and treat your credit card like a debit card. Take the total amount of money that you have to spend each month, and then deduct your purchases every time you spend money.
If you are burdened with credit card debt, or if you are looking to avoid credit card debt, it is vital to understand how people accumulate so much debt. If you do not have a way to pay off a high credit card balance, bankruptcy may be an option for you. Contact George R. Belche, Attorney at Law today.
George R. Belche, Attorney at Law
Lawrenceville, GA 30046