Surviving on Credit Cards

We’re in trouble. And by we I mean me, you, and everyone else that’s finding it harder and harder to meet the daily living expenses we all face during hard times. And, folks, those times are now.

Today, I received my $600 tax refund check, courtesy of the U.S. Treasury. I was glad to see it in the account. But truth be told, I had to look twice to make sure it was indeed a check deposited into my account. Not that $600 isn’t a nice little addition to my account, because it is. But it’s not all that much cash, when you get down to it. And I’m sure others are feeling that same way.

With the recession we’re going through and the housing market swimming in the pool of devastation it is currently swimming in, Americans are not able to afford the lifestyles they either had or thought they could through the use of credit, at least credit other than the plastic cards we, as a country, are so fond of. With the reality of the home as ATM basically gone, consumers are turning back to the good old credit card, this time not for flat-screen TVs and trips they can’t afford but for the basics.

Americans are strapped for cash. Besides the home fiasco, unemployment, the war, ridiculous gas prices, and everything else we’re going through as a country, now we’re faced with higher food prices, the most publicized food item being the high price of rice. Sorry, didn’t mean to rhyme there. It’s not funny.

Credit cards, that good/bad old friend of ours, is creeping back into the minds of consumers as the quickest and best way to meet their needs. American consumers no longer have the benefit of seeking cash from other places–now they’re using their credit cards to pay for a lot of things they would not normally pay for with plastic.

According to the Federal Reserve, American credit card debt rose 6.7% in the first quarter to just over $957 Billion. This type of debt is costly, and Americans don’t like doing it. But faced without a choice, and faced with needing to pay for higher-priced gas and higher-priced food, these consumers are left with little choice.

For many, their income has remained relatively flat, yet the cost of living has risen dramatically. Truck drivers and industries that require using fuel have been hit dramatically, forcing some to resort to alternative cost-cutting, perhaps in areas where they would not have normally thought to cut costs. And credit card delinquency rates have been on the rise, hitting a 4-year high in February of just over 4.5%.

The cycle will likely continue. Higher balances on credit cards, less in savings, and the higher cost of gas and food will limit the amount of discretionary spending consumers can enjoy, which means the more the economy will suffer. I know for me, personally, a $600 tax rebate is going straight to bills. Maybe not last year, but this year, I’m never even going to see that $600.