Nearly 90 million Americans struggle to make ends meet

Many American households struggle to pay their living expenses, relying on credit card debt to meet expenses.

A survey by the US Census Bureau found that 38.5% of US households, or 89.1 million people, had difficulty making ends meet between April 26 and May 8. The agency said the current level of hardship is higher than when Covid-19 ended, when millions lost their jobs. Last year, the figure was 34.4% and in 2021 it was 26.7%.

The rate of households struggling varies geographically. People in lower-middle-income states like Louisiana and Mississippi are feeling the greatest financial pressure. In some metropolitan areas like Los Angeles and Riverside, nearly half of households are struggling.

This situation has led many households to turn to credit cards. 25 million households said they used credit cards or borrowed money to meet their expenses, an increase of 2.6 million households compared to last year.

However, these people may face new worries in the future when the average interest rate on this type of debt has exceeded 20%.

Previously, data from the Federal Reserve Bank of New York (Fed New York) showed that US household debt reached a new record of 17,050 billion USD in the first quarter, an increase of 148 billion USD compared to the fourth quarter of 2022.

The agency also noted that credit card debt remained flat, remaining at $986 billion. This is the first time in more than 20 years that there has been no decline in this category. According to the New York Fed, credit card debt typically declines in the first three months of the year because this is the time after the holidays and consumers tend to tighten spending and pay down debt thanks to tax refunds.

This partly reflects the fact that more people are using credit cards to pay for everyday necessities, said Ted Rossman, senior analyst at Bankrate. Credit card debt has increased at the fastest rate of any debt category in the New York Fed report, driven by inflation, increased spending after the pandemic, and changing consumer behavior.

Duc Minh ( according to Bloomberg, CNN )

Source link