Why is credit card debt so high in America and how can we lower it.

High Credit Card Debt
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High Credit Card Debt
Introduction
The Credit Card debt crisis is on the rise in the United States of America, and it is a reflection of the United States overall financial situation. The credit card debt is accrued on people for several reasons (Hoffower, 2020). The high credit card debt can hurt the individual in different ways like reducing cash flow, paying high-interest charges, and damaging credit score. The hidden costs incurred in the credit card results in increasing the overall debt. The credit card debt is a significant problem because it can result in creating depression, stress, and other serious health issues. Once the person gets in a high debt situation, it becomes difficult to manage the daily expenses (Friedline et al., 2017). When the person spends money on paying debt, it gives fewer options to the person on setting priorities such as life savings after retirement and planning summer vacation. The main reason for high credit card debt is that the individuals are unaware of the hidden costs that apply to the overall spending. The factors contributing to the high credit card debt include stagnant wages, loan payments, unexpected expenses, rise in the price of medical services and total cost of goods.
Reasons for High Credit Card Debt
The household debt of American families is increasing with time, and the main reason for it is the credit card. Numerous factors such as high loan payments, unexpected expenses and stagnant wages play a part in increasing the credit card debt. The people, especially millennials, use a credit card for ordering food, shopping, travels and transportation. It results in incurring high credit card debt which makes it difficult for the individuals to manage their expenses. The people do not understand the perks and cash backs associated with credit card usage (Hoffower, 2020). The rewards provided by the companies on using a credit card are relatively low as compared to the total finance charges. The American people have been affected by credit card debt. The credit cards have resulted in aggravating economic stability in the United States.
The living expenses of American people are more than their income. Since the year 2003, the income of citizens has increased by approximately 28 per cent whereas the total living cost of people has increased to 30 per cent. Moreover, the cost of beverages items and food has increased by 38 per cent (Gorbachev & Luengo-Prado, 2019). Majority of the households in America who are earning below $30000 are forced to use credit cards to meet utilities, groceries and childcare expenses.
The price of medical services has increased to 57 per cent since the year 2003, which is almost thrice of income growth. The unemployed people and senior citizens are likely to incur credit card debt than any other group. The dire economic condition of the country is harming the financial status of people. The US government needs to take some necessary measures for improving the lives of the common man (Friedline et al., 2017). It will play a significant role in developing the trust of the people on the system. The utiliz...