Based on one poll, 43% of Americans plan to acquire debt in the following six months, whereas 61% are already in debt. Necessities, such as health or medical issues, account for more than 80% of consumer debt.
The poll’s results also show that roughly 25% of Gen Z Americans took on debt to improve their credit score.
Furthermore, parents and individuals with lower credit scores were far more inclined to take on debt. More precisely, around 80% of those with a FICO score between 300 and 579 and roughly 46% of individuals with FICO scores of 800–850 have debt.
Credit card debt leads the pack (70%), followed by auto car loans (33%), mortgages (29%), and medical debt.
Although most Americans owe a considerable amount of money, many are hesitant to add more. In fact, 60% of consumers would pick cash or savings over credit cards when buying something, particularly those with bad credit.
On the other side of the coin, 18% of Americans have never had a debt.
The continuous price hikes indicate inflation’s devastating impact on many households, with expenses for essential items rising far faster than typical pay.
On that note, Black, Hispanic, and lower-income families have been hit by inflation the hardest because a significant portion of their income goes to necessities such as transportation and food.
Even though the economy is slowing down, economists are concerned that the Federal Reserve’s efforts to reduce inflation may cause it to tighten credit too quickly. In addition, if borrowing costs continue to rise, a recession could be on the horizon by next year.