Surge in Credit Card usage in USA

The latest CNN report mentioned that "Americans ramp up credit card usage as high prices continue to bite"

CNN news extract dated 07 June 2022:

Americans are continuing to lean on credit cards and loans, as consumer credit surged by $38 billion in April amid the highest inflation in 40 years.

The latest Federal Reserve data on outstanding consumer credit, released Tuesday afternoon, comes after March's record increase of $52.4 billion. That figure has since been revised downward to $47.3 billion.

Revolving credit, which mostly includes credit card balances, grew at an annualized rate of 19.6% and totaled $1.103 trillion in April, just breaking a pre-pandemic record of $1.1 trillion, according to the report.

Screenshot from the CNN news article

 My muse

While it can be viewed either as concern or confidence, it is unhealthy for people to require leverage.  For the rich, it may not be a problem but for the lower-income demographics, it can easily lead to expensive debts.  While we noticed trends of people buying "cheaper" alternatives of various family essentials, the current inflation will continue to squeeze the disposable income of lower-income citizens.  Be it a credit card, or a buy now pay later (BNPL) facility, there could be an increased probability of default and bad debt.

Over-leverage is known to send both rich and poor into financial ruin.  Thus, let us be reminded that we should spend within our means and invest with what we can afford to lose.  With revolving debt over $1.103 trillion and above the pre-pandemic levels, the volatile market conditions will put downward pressure on the market as people work with a lesser disposable income (due to the prevailing inflation).  Let us continue to exercise caution as the world navigates around Covid19, food, supply chain & energy challenges.

News Source: https://edition.cnn.com/2022/06/07/business/fed-consumer-credit-april-2022/index.html