(NewsNation) — American consumers are continuing to spend, with many opting to pay with credit cards as they grapple with inflation and maintaining lifestyles. Mixed in with the holiday season, millions of Americans are feeling the pinch in everyday spending.
Nationally, credit card spending rose in the third quarter at major banks including 9% at JPMorgan Chase, the nation’s largest bank, and 15% at Wells Fargo, The Wall Street Journal reports.
The outlet reports credit card loans or unpaid balances on accounts, jumped nearly 16% in the third quarter at JPMorgan compared with a year ago, signaling consumers are taking longer to pay their bills.
Americans are resorting to using credit cards for essentials including food and college tuition. Financial experts highlight that right now, consumers are even dipping into their savings.
“We’re now seeing a lot of people even tapping into their retirement funds,” said Lynnette Khalfani-Cox, author of Bounce Back: The Ultimate Guide to Financial Resilience. “We’ve seen a lot of data showing that some people are either taking emergency or hardship loans from their 401k or their 403b plans on the job or that they’ve just outright taken loans from their retirement funds, which is another indication that they’re using up their savings.”
Financial experts attribute the increase in post-pandemic pricing to the rising costs of groceries, rent, electricity and gas.
Contrarily, bank companies report a decline in deposits compared to previous years. JPMorgan saw a 3% drop in deposits, Citigroup 5% in the personal banking unit. Wealth management units saw declines of 10% and as much as 31%.
Financial experts advise people who are in debt to “stop digging,” in other words, refrain from spending money they don’t have, to avoid further financial strain.
There are multiple options to pay down debt. The Federal Trade Commission suggests starting by creating a budget to create a plan for your finances and keep track of spending.
Bankrate suggests consumers consider consolidating their debts into single payments or opening a balance transfer card that will allow them to transfer debt to a single card. Transfer credit cards often offer introductory 0% APR periods.
Additionally, if you have balances spread across multiple cards, Bankrate recommends the “debt snowball” or “debt avalanche” methods.
The debt snowfall method allows consumers to make minimum payments on all cards, but add any extra money to the credit card with the lowest balance. The debt avalanche method focuses on paying down the credit card with the highest interest rate first.