21% of Americans Now Rely More on Credit Cards -- and That's Bad News

Credit cards can be a bad tool to fall back on in a pinch.

Americans have been grappling with rampant inflation for many months. Unfortunately, the problem could get worse before it gets better.

These days, the cost of just about every essential expense is up, from groceries to gas to housing to apparel. While some companies are throwing higher wages at workers, many people are still losing buyer power this year despite an increase in pay.

Not shockingly, this recent stretch of inflation is causing some people to change their financial behavior. In a recent Nationwide survey, 35% of respondents say that over the past 12 months, they've started to drive less, while 48% have begun dining out less frequently.

Those are healthy ways to combat inflation. On the flipside, though, 21% of respondents say they've become more reliant on credit cards over the past 12 months to cope with rising living costs. And that could end up having disastrous results.

The problem with relying on credit cards

Credit cards can be a useful financial tool, and in a pinch, they're a reasonable option to fall back on. But there's a danger in using credit cards too much: racking up a substantial balance and being charged a huge amount of interest on it.

At a time when living costs are so inflated, it's easy to see why consumers might charge an extra $100 on a credit card one month or an extra $200 another. The problem, though, is that building on that debt month after month could trap consumers in a cycle where they're unable to climb out of that hole.

Plus, too much credit card debt could lead to credit score damage. Consumers whose credit scores take a hit might struggle to borrow affordably when they need to, or once they've maxed out the credit cards they have.

A better solution

If you've been struggling to make ends meet in light of inflation, boosting your income with a second job is a move worth exploring. If you're able to generate extra earnings, you can use that money to cover your bills and avoid having to incur or add to a credit card balance.

Just as importantly, by holding down a second job, you might put yourself in a better position to build an emergency fund. Once you have some money in savings, you may not have to resort to carrying a credit card balance the next time your bills get out of hand.

More consumers having to fall back on credit cards over the past year is understandable. But that doesn't make it a good thing. Before you start relying on your credit cards to bridge the gap between what your bills cost and what your paycheck can cover, try getting a second job and seeing if that helps.

Of course, if you have plenty of existing savings to tap, you may be able to ride out this wave of inflation by dipping in as needed. But if that's not the route you want to take, or it's not on the table, then getting a second job is a solution worth exploring.