The U.S. Consumer Debt Crisis: How Credit Card Debt is on the Rise

In our everyday lives, it’s unavoidable to spend. From the food we eat to the essential things we need, spending has always been necessary for our survival. Indeed, we live in a society that revolves around consumerism.

However, our species had gone above and beyond spending for survival. We buy things we want, even saving vast amounts of money to afford an expensive purchase. Many had resorted to loans and debt as a means to an end.

That is why the use of credit cards has been widespread throughout the years. Not only does it give consumers easy access to money, but it also allows them to make a large purchase without having to bring a wad of cash with them. But excessiveness has come into play, and credit card debt is steadily increasing as the years’ pass.

How Consumerism Affects the Culture of Debt

It’s a fact that humans need to consume to survive, for life wouldn’t survive without it. Specific needs should be addressed and consumed for us to function well into society. However, as time progresses, the line between what we need and what we want blurs inside our heads. Sometimes, we buy not because it can help us survive our day-to-day life, but because we want it and use need as an excuse. Most of the time, though, we just like buying things we want.

Buying clothes is a necessity. No one is expected to get out of their houses completely bare for the world to see, or use the same shirt to work for three consecutive days. However, when we begin mindlessly buying clothes despite the accumulation of unused fabrics in our closets, that’s where the problem starts to take root. This kind of consumption no longer fits the narrative of human necessity.

So some plunge into debt to be able to buy things. Many ogles at shiny and expensive things, even landing themselves in debt to acquire the item. This consumerist society had made credit cards popular. Sure, a credit card can give many benefits to an individual like building a credit history or acquiring rewards and points during purchase.

However, it is unfair to label everyone with high credit card debts materialistic. Consumerism, after all, isn’t just about excessive spending on unnecessary items. As long as you spend money, you consume either items or services. And since credit cards can be used in almost anything, many use it to pay off bills. Some even use it for emergency expenses their savings can’t cover. Still, it is a form of consumption at the end of the day.

With almost every individual owning a credit card, it’s no surprise that the accumulation of credit card debt rose. However, with no signs of stopping, America has another crisis looming above their heads.

The American Debt

According to the U.S. Census Bureau’s estimate of 253 million American adults residing in the U.S., about 191 million individuals own a credit card, a charge card, or even both. These holders have more than one credit card, with at least four cards. An average household has a total accumulation of credit card debt of $8,398.

The total U.S. consumer debt has amounted to $13.86 trillion, where $1.08 trillion is for credit card debt alone. This means that it takes up 26.2% of the total consumer debt since it’s paid off each month. Compared to mortgage loans and student loans, credit card debt might seem like a small number. However, credit card debt is at an all-time high. This is $11.2 billion higher than the previous record set during April 2008, when the Housing Crisis also deeply troubled America. 

It doesn’t help that its rate is also increasing, weighing down the economy in the process. On average, an American pays the bank with a 16.9% interest rate to their credit card debt, which was the highest level ever recorded according to the Federal Reserve. Many find difficulty in paying this back, and with the employment rate at a 50-year low, individuals with high credit card debt also continue to grow.

Unemployment and debt can go hand in hand. Many resort to debt to provide means of survival. Be it credit card debt, auto loans, or Ninja Credit– unemployment can push a ton of households into debt. High rates and levels of debt are said to be indicators of an economy not doing well.

Despite all of this, consumerism still thrives. With the ever-progressing society and technology, consumerism has found other ways to prosper. Buying online has been the new norm, and using a credit card is one of the most popular methods of paying it off.

Takeaway

Consumerism had taken its root deep into our society. It has become an integral part of our survival, both as an individual and as a species. Unfortunately, it had also fed into excessive spending, even resorting to debt to pay off wants or needs. With the continued increase of credit card rates and debt, the U.S. Consumer Debt had also entered a crisis and is still expected to grow as the economy expands.

Leave a Reply

HowToFinanceMoney © 2011-Present. All rights reserved.

How to make $ in stocks even if you're a total beginner