More Americans are relying on their credit cards to pay their bills as inflation soared to a 40-year high.
A new report from the Federal Reserve on Thursday shows consumer credit, the amount advanced to individuals for purchases, soared $41.8 billion in the United States in February. The increase is significantly higher than the $8.9 billion increase recorded in January.
The jump was fueled by a more than 20% increase in the use of revolving credit, including credit cards. Non-revolving credit, including auto and student loans, rose more than 8% in February.
Economists say the data indicates that Americans are increasingly turning to credit cards to meet day-to-day expenses.
“You have an inflation rate of almost 8%, which is growing faster than people’s incomes,” said Stephen Moore, former economic adviser to President Donald Trump. “People are actually losing purchasing power because inflation is like a tax on income.”
“At the end of the day, people have to spend more to get the things they want and that’s a major factor in this rising debt,” he said.
Over the past year, inflation has climbed to 7.9%, the fastest rate in over 40 years. The effects are felt in all areas, but especially in the prices of everyday consumer goods.
Gasoline prices have increased by 38% since February 2021. The cost of food, meanwhile, has increased by 7.9%.