A new survey found that over one-third of American households relied on credit cards to cover expenses in December.
Data from the U.S. Census Bureau’s Household Pulse Survey, seen by Business Insider, revealed that 35.5% of households relied on credit cards to cover expenses in December amid historic inflation. The total is the highest recorded since the start of the survey in April 2021, when just 21.2% of households reported covering expenses with credit.
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Another 25.8% of households withdrew money from savings or retirement funds or sold assets to cover expenses, and 10.4% borrowed from friends or family. All in all, 71.7% of people were unable to cover all expenses with their regular income source.
The number of households that use credit cards to cover expenses trending upward is concerning. It indicates that people’s savings are running out, Christine Benz, director of personal finance at Morningstar, told Business Insider.
“Consumers are needing to rely on non-working income sources to meet their spending needs,” Benz said. “If some of these forces continue, that would be a precursor to a broader economic softening.”
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The survey gives a picture of the dire economic situation many U.S. families are in amid soaring inflation and an economy on the brink of a recession.
