The Increase in Credit Card Debt Leads to Government Expansion
While the White House boasts about the strength of the economy, Americans are finding themselves buried in credit card debt. By the end of last year, credit card debt reached a record-high of $1.13 trillion. This staggering figure, coupled with the $240 billion in interest charged annually on credit cards, paints a bleak picture of the financial struggles faced by many Americans. So, how did we get here? The answer lies in failed government policies.
Over the past four years, excessive government spending has created a cost-of-living crisis, plunging families into debt. The government’s massive spending, borrowing, and printing of trillions of dollars have devalued the dollar, resulting in inflation. As a result, every American’s paycheck and savings have lost value, making it increasingly difficult to make ends meet.
From January 2021 to June 2022, real average weekly earnings dropped by 5.1 percent. Even by January 2024, three years after President Joe Biden took office, real earnings remained down by 4.4 percent. This decline in earnings translates to a weekly paycheck loss of $85 for the average American family, despite overall income growth of $270. With 60 percent of families living paycheck to paycheck, many individuals have been forced to take on second or third jobs just to survive. While this may seem like a positive indicator for job growth, it is actually a sign of impoverishment rather than prosperity.
As families struggle to make ends meet, many have resorted to relying on credit cards to cover basic necessities such as rent, groceries, and utilities. This reliance has caused credit card balances to skyrocket to a record $1.1 trillion. Shockingly, almost half of Americans are unable to pay off their credit card purchases at the end of each month. This debt burden is not limited to one-time holiday shopping sprees; a quarter of cardholders still carry debt from their 2022 holiday expenses.
To make matters worse, many Americans accumulated credit card debt when interest rates were at or near 0 percent. However, with the expiration of introductory offers and the rapid rise in interest rates over the past few years, financing costs on credit cards have reached unprecedented levels. The combination of record credit card balances and high interest rates means that Americans are now paying a staggering $240 billion annually in interest alone, before even making a dent in their outstanding balances. This additional cost further exacerbates the already skyrocketing cost of living.
Unfortunately, many families find themselves trapped in a cycle of debt where they cannot afford to pay their existing expenses, let alone additional finance charges. They are forced to take on more debt not only to cover current bills but also to pay off the interest from previous borrowing. This downward spiral leads to financial disaster.
The damage inflicted by the government’s policies extends beyond individual families. The federal debt has surged by about $6.5 trillion since January 2021, reaching an astonishing $34.2 trillion. Interest on this debt now costs taxpayers over $1 trillion annually, accounting for over 40 percent of all personal income taxes. This massive debt burden does not go towards essential infrastructure projects or public services but solely towards servicing the debt.
The consequences of this government-induced financial crisis are far-reaching. Last year, it was projected that interest payments would consume a record percentage of the economy by 2025, a forecast that has been confirmed by the nonpartisan Congressional Budget Office. The nation’s credit card has been maxed out by politicians, with interest soon becoming the federal government’s largest expense.
While politicians can rely on the Federal Reserve to create more money for them, American families do not have that luxury. Instead, the continuous money creation by the government only fuels further inflation, trapping families in an endless cycle of working harder but falling further behind. It is no wonder that Americans view the economy unfavorably in polls. The past three years have seen them regress financially, despite nominal salary increases.
This troubling trend is bound to continue if Washington does not rein in its spending. Every time the federal budget expands, the family budget contracts. It is crucial to recognize that the views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times. However, the facts presented demonstrate a clear need for government accountability and responsible fiscal policies to alleviate the burden of credit card debt and restore financial stability to American families.
