Americans Rely More on Credit Cards Due to Inflation

Posted by Matin Varshochi in Credit CardsJuly 12, 2022(Last Updated July 29, 2022)3 min read
Key Takeaways
  • Over the past year, the U.S. economy has experienced higher inflation than before, reaching 6.8%, the highest since 1990.
  • These higher prices have made more Americans rely on their credit cards for everyday purchases.
  • Overusing credit cards can have many consequences, but one way its usage can be reduced is by only purchasing necessities.
Are you ready to make some real money moves?

The United States (U.S.) economy has experienced higher inflation than before, reaching its highest point since 1990. As a result, many Americans are turning to their credit cards to pay for their needed goods and services that have risen in price. Unfortunately, excessive use of credit cards to pay for goods and services can have major financial setbacks.


Reasons Behind Rising Inflation

War in Ukraine


Russia is the world's third-largest exporter of oil and natural gas, meaning that they hold a large portion of the supply that is traded on the global market. When Russian President Vladimir Putin made the executive decision to invade Ukraine, many Western and European countries publicly announced their disapproval. Consequently, to retaliate against Russia, many of these countries imposed economic sanctions.


Sanctions are when a government decides to stop trading with another country due to their involvement in inhumane actions, such as Russia invading Ukraine. Consequently, as these countries stopped trading with Russia, they lost access to Russia’s oil, meaning there was less supply on the market. The lower supply levels caused higher gas prices, ultimately leading to other goods and services rising in value. 

COVID-19 Pandemic

During the peak of the COVID-19 pandemic, many people were out of work, and there was fear the U.S. economy would fail. Consequently, the government implemented relief packages to stimulate the economy to prevent an economic recession. Consequently, the injection of money led to high inflation and rising costs. 


Image Credit: shisu_ka /


How Excessive Credit Card Usage can be Harmful

According to Nationwide Survey, due to the increased cost of living, 21% of people have mentioned that they now rely more on their credit cards to help them fund their expenses. Although credit cards are beneficial when used effectively, this method can lead to significant financial repercussions that will be difficult to escape. 

When credit cards are used excessively, it could lead to a person maxing out their limit and not being able to pay back the full amount at the end of the month. Consequently, the remaining balance that has not been paid off is subject to high-interest rates, which can cause long-term negative impacts on a person’s financial position and credit score. 

Recommended Read: Tips on How To Improve Your Credit Score

Furthermore, the impact of excessive credit card usage on the credit score can lead to lower success rates for other major loans. For example, as the credit score is a crucial factor in attaining a mortgage or car loan, when loan officers see people with lower credit scores, they are more reluctant to approve their application as there is a higher chance of defaulting. Therefore, although using credit cards now to keep up with the higher cost of living may seem viable, it will most likely lead to high levels of credit card debt and a lower credit score. 

How to Reduce Credit Card Usage


Having and using credit cards is beneficial as it allows one to build up their credit score. However, when used excessively, it could have adverse financial consequences. One way to reduce credit card usage is only to purchase necessities, which can be determined by separating expenses into wants and needs. 


Image Credit: Pormezz /



Wants are expenses that make life enjoyable and are not necessary to survive. These expenses include monthly subscriptions to streaming services such as Netflix and Spotify and going out to eat with friends. 

Recommended Read: Save Money by Canceling Unused Subscriptions


Needs relate to expenses that are required to survive, and some examples include housing, transportation, utilities, and food. Although these expenses cannot be removed, their cost can be reduced. For example, one common way food expenses are reduced is through buying bulk. For example, buying foods in bulk will last longer and come out at a lower price, reducing the overall monthly amount spent on food. 

The Money Wrap-Up

It can be difficult to maintain a low credit card balance due to the rising prices. However, it is crucial to try and limit expenditures with a credit card as failure to pay it off in full will start a financial rabbit hole that will do more harm than good. Instead, try to become more aware of what is being bought as this skill it will allow you to save more money over time and overcome the current economic issue of rising costs. 

Main Image Credit: Nattakorn_Maneerat /

Was this content helpful?
Comments (0)

Sign In to leave a comment.

Download the CapWay App

Access more features to your Money Account

  • Money Goals
  • Request Money
  • Categorize Spending
  • Money Talk

The CapWay, Inc Debit Visa Card is issued by Metropolitan Commercial Bank (Member FDIC) pursuant to a license from Visa U.S.A. Inc. “Metropolitan Commercial Bank” and “Metropolitan” are registered trademarks of Metropolitan Commercial Bank ©2014.

1. For Money Account holders with a negative balance, the CapWay debit card will go into freeze until funds are deposited to bring account back to current. See terms and conditions

2. Sending or receiving money from other CapWay account holders will be instant. Transfers from other accounts could take up to 48 hours, depending on the financial institution.

3. Early access to funds requires direct deposit. Early payment is not guaranteed and is dependent on the timing of payer's submission of deposits. We generally post such deposits on the day they are received which may be up to 2 days earlier than the payer's scheduled payment date.

4. Money Goals allows account holders to save money towards financial goals created within the CapWay platform. Funds can be transferred from your Money Account or saved through the rounding up of your transactions from purchases.

5. CapWay offers financial content through Learn Money free of charge, but may include advertisements through affiliates. Phunds, CapWay's literacy program and session, is paid content or co-branded content.

© 2019-2024 CapWay Inc. All Rights Reserved.