Credit card usage shifts as everyday costs jump

BALTIMORE (Map, News) - With gas prices soaring and food costs rising, consumers are keeping a close eye on their credit card balances.

“People are tending to be a little more cautious in their spending,” said Michael Gordy, vice president of lending at SECU Credit Union, the largest state-chartered credit union in Maryland. “The volume in the transactions hasn’t been as great as it has been in the past.”

Credit card usage has increased as high costs force consumers to live “paycheck to paycheck,” Gordy said.

Americans already hold $850 billion in credit card debt and the average balance per card-holding household is $8,568, according to the Consumer Federation of America.

“What we see underscores the data that people are charging more and more items,” said Gail Cunningham, spokeswoman for the Silver Spring-based National Foundation for Credit Counseling. “They’re not living large. They’re charging their living expenses.”

Home investments have also contributed to the trend. “A home is the largest investment, and people don’t want to lose their homes,” Cunningham said. “Food prices are up, gas prices are up, and people are really feeling the squeeze.”

Many consumers are using their stimulus payments from the government to manage their card balance, another sign people are worried about accumulating debt, said Ellen Cannon, managing editor for bankrate.com. Of the $106 billion being distributed in stimulus checks, consumers will spend about $28 billion to pay down debt, according to a recent National Retail Federation survey.

Cunningham doesn’t see an end to the card usage trend unless individual incomes increase.

“People are understanding that credit is a convenience, but it can quickly turn into their enemy if amassed in large, unmanageable debt,” Cunningham said.

SECU often hosts seminars for its customers on how to understand credit cards, credit reports and credit scores, Gordy said.

“We know these are challenging times, so we want our customers to be as educated as possible,” Gordy said.

Staff Writer Andrew Cannarsa contributed to this article.

anthony.fair@baltimoreexaminer.com

Advertisement