Hot Inflation Increases Credit Card Use, USAA Bank Expert Shares His View
Food, gas, clothes – you name it. Everything costs more.
SAN ANTONIO — Consumer spending, which accounts for more than two-thirds of the U.S. economy, is evolving in this high inflation environment. Food, gas, clothes – you name it. Everything costs more.
KENS 5 spoke with Ryan BaileySenior Vice President and Head of Retail Banking at USAA, who shared the latest data from their financial institution. USAA has served service members, veterans and their families nationwide for more than a century.
Bailey says discretionary spending is showing signs of slowing, as prices for non-discretionary items continue to rise.
“In those non-discretionary categories, like gas prices and groceries, those areas are where they really spend money. In fact, gas prices are up. 21% year over year,” Bailey said.
People are increasingly turning to borrowed money to offset rising costs.
“You’re starting to see people spending more on their credit card. With the stimulus payments last year, we’ve seen a significant amount of money flow into both spending but especially saving. Now, they take that money they had in savings and start spending it,” Bailey said.
For example, for groceries, another non-discretionary category, July data from the USAA shows spending rose 4.6%, with credit cards posting a year-over-year increase. another higher at 7.9% compared to the use of debit cards at 3.1%.
“I think we need to get used to the stimulus payments no longer coming in and really adjust our spending back to normal levels. I also advise paying off your credit card every month instead of building up those balances,” did he declare.
You might also consider looking into options to consolidate variable rates into a fixed rate. You should see if it makes sense to consider a fixed rate personal loan to consolidate variable rate debt, especially in these times of inflation.