Ramsey Solutions founder David Ramsey addresses skyrocketing consumer credit card debt on “Cavuto: Coast to Coast.”
Americans’ credit card debt stood at an incredible $887 billion in June 2022, according to recent data from the Federal Reserve Bank of New York.
This represents an increase of approximately 5.5% compared to the first quarter of the year – and an increase of 13% compared to the period of the previous year.
Yet even this incredibly high number doesn’t seem to scare some people off from credit card use.
Amid today’s high inflation, many Americans continue to rack up credit card debt to cover expenses and pay bills.
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Personal finance professionals warn against this.
“I understand – first [we had] a pandemic and now record inflation,” said Rachel Cruze, financial expert, New York Times #1 bestselling author and host of “The Rachel Cruze Show.”
She is also a Ramsey Solutions professional and a daughter of Dave Ramsey.
Rachel Cruze said “a lot of people are struggling to cover expenses they could afford just a few months ago.” However, she added, “a credit card is not the solution.” (Ramsey Solutions/Fox News)
“And I see a lot of people struggling to cover expenses that they could afford just a few months ago. And it’s a scary place,” Cruze told FOX Business this week.
Still, “no matter where you are financially, a credit card isn’t the answer,” Cruze said. “Especially when it comes to living expenses.”
“When you use credit for day-to-day expenses and expenses, you are likely to spend a lot more than you would with cash.”
Cruze pointed out that “when you use credit for everyday items and expenses, you’re likely to spend a lot more than you would with cash.”
“And that debt can easily pile up faster than expected.”
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Cruze offered words of wisdom and common sense.
“I want people to know that living – even now – without a credit card is possible.”
Here’s how.
According to financial expert Rachel Cruze, living “without a credit card is possible” in these tough economic times. (iStock/iStock)
3 smart tips to reduce your credit card use
“Personal finance is 80% behavior and only 20% head knowledge,” Cruze said.
1. “So breaking the habit of swiping a credit card is the first step. Take debt off the table.”
2. “Then build a zero-based budget and cut where you can while looking for ways to generate more revenue,” she said. “Remember, these are short-term sacrifices.”
3. “Third, live on less than you earn,” Cruze said.
“It’s another change in behavior,” she said. “You decide you’re not going to ‘buy’ what you can’t afford right now. It may mean buying different items or shopping at different stores, but it will be worth it.”
Still not convinced that using credit cards to pay for daily household expenses isn’t a good idea?
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The average credit card rate has hit its highest point in decades, according to a recent survey by Bankrate.com – and it could rise further.
Financial expert Rachel Cruze says “no matter where you are financially, a credit card isn’t the answer.” (iStock/iStock)
Bankrate found in early September that the average credit card rate had hit an all-time high of 17.96%.
That rate was up 3.5% from about a month ago and 10.8% from a rate of 16.21% about a year ago, according to Bankrate.com.
‘The Ramsey Show’ co-host George Kamel explains that Americans are racking up credit card debt to keep up with inflation and how to budget to avoid it
Additionally, “Federal Reserve Chairman Jerome Powell has made it clear that the Fed is not done raising rates – not by a long shot,” said Ted Rossman, senior industry analyst at Bankrate.com, in a statement accompanying Bankrate’s findings in early September.
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Fox News Digital’s Megan Henney and Aislinn Murphy contributed to this report.
