Trouble ahead? More Americans are using credit cards for necessities
Written by Geoff Williams
Posted On: August 8, 2011
So, technically speaking, the recession has been over and in our rear view mirror for about two years, and now we get news that people are using their credit cards more. Which is good news for our economy, right?
Well, not exactly. It sounds, at first, like it could be good news, but it is more likely bad.
First Data Corp., a prominent player in the electronic commerce and payment process industry, issues frequent SpendTrend reports that take a look at how Americans are disbursing their hard-earned income. They recently came out with an analysis looking at how June 2011 spending stacked up to June 2010, and it shows that Americans are using their credit cards more, which, as noted, sounds promising. As in, the economy is roaring back to life, perhaps?
Well, not exactly. The report shows that, fueled by inflation, Americans have been using their credit cards more to pay for gas, food and other necessities. Buying that 46-inch TV and then paying it off within the month, and getting a lot of rewards on top of that? Not so much.
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Granted, this still could be good news, right? Obviously, this means that people are using their gas rebate cards and paying them off every month and reaping some rewards from that?
Well, that's probably the case for some people, but gas purchases on credit cards were 39 percent higher last June than the previous June. Food purchases on credit cards were up five percent.
And some analysts fear that the nation's collective credit card debt may soon resume its climb. It had been dropping, as Americans paid down their debt. The news that our debt may be climbing, especially for those of us worried about the U.S. credit downgrade, makes a depressing way to end this blog post.
(Long, uncomfortable pause.)
I hear YouTube has some nice videos of kittens playing the piano. Maybe we could all go over there for awhile. Anyone?
Geoff Williams is a freelance journalist who has covered personal finance for several years, writing mostly for AOL's personal finance blog, WalletPop. A former features reporter for The Cincinnati Post, Williams's work has also appeared in numerous magazines including Consumer Reports, AARP Bulletin and Ladies' Home Journal. He is the author of Living Well with Bad Credit (HCI Books 2010).
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