According to a NerdWallet report, more Americans are concerned about increasing household debt. Culprits of rising debt include credit cards and buy now, pay later offers.
These offers are causing Americans to spend money they do not have.
“Americans are definitely spending more, not because they necessarily want to, but because they have to,” said Sara Rathner, a personal finance expert with NerdWallet. “Inflation is driving up the prices of all these things we need to buy every day and that means that more consumers are leaning on their credit cards to make ends meet without necessarily having a plan in place to pay those bills back in full. “
People are most concerned about prices rising faster than income and using credit cards to cover necessities.
Buy now pay later also contributes to debt numbers, as about 20 percent of Americans say they've used the service in the past 12 months.
“There are many consumers who, unfortunately, have not been able to make their payments on time for these plans, and sometimes it can be a result of having multiple buy now, pay later plans going on at the same time,” said Rathner. “That means a lot of money is automatically coming out of your bank account, and you just want to be careful before you enter into these agreements to make sure that you have the money available to make these payments when they're due.”
She says for big purchases, a better approach could be using a credit card with rewards so you can get some of that money back.
But the key is to give yourself time to save so you can make on-time payments.