More and More Americans Turning to Credit Cards to Cover the Basics

We all know that the economy has been lousy not only in the United States but throughout the world over the past few years. It’s the recession that never seems to end.

The poor economy has forced low and middle income Americans to rely more and more on their credit cards to cover their basic needs.

A recent survey by the advocacy group Demos found that more than a third of their respondents said that they are now using their credit cards to cover basic living expenses to pay for housing (rent and mortgages), utilities and food.

The survey found that on average over the past 12 months people have relied on their credit cards to pay their living expenses for at least 5 of those months.

To make matters worse, one out of every two households said that they put out of pocket medical expenses on their credit cards as well.

The average credit card debt of the respondents surveyed was a whopping $9800 and the interest rate they were paying averaged 14.8%. Almost 25% of those surveyed said they were paying in excess of 20% interest rate on their credit cards.

The respondents reported that on average they have been in debt to one or more credit card companies for 5.1 years.

The survey found that while the recession certainly has made people rely more on their credit cards than ever before to cover their basic living needs, it is hardly a new phenomenon.

Prior to the worst of the recession hitting, households that earn less than $50,000 a year were already using their credit cards as a safety net, or put another way, to just help them get by.

This flies in the face of everything that we have previously believed about credit card debt. The common belief was and probably still is that credit card debt is almost always caused by frivolous spending and people living beyond their means.

While living beyond one’s means certainly plays a big role in many people’s credit card debt, so too can unexpected expenses such as medical costs.

So basically we’re left with a cocktail of reasons for the record $1 trillion credit card debt that Americans have racked up. The poor economy has greatly exasperated and added to our record debt numbers to be sure.

How do we get out of this mess? First off, we have to become more disciplined as individuals and only use credit cards when absolutely necessary. And secondly… we have got to get the hell out of this recession!

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