Credit cards can be a convenient and useful financial tool, but they can also be dangerous if not used responsibly. When you use a credit card, you are borrowing money from the card issuer to make purchases. If you are able to pay off the balance in full each month, you can use credit cards to your advantage by avoiding interest charges and potentially earning rewards. However, if you are unable to pay off the balance in full each month, you will be charged interest on the remaining balance. This interest can quickly add up, making it difficult to pay off the balance and potentially leading to high levels of debt.

In December 2021, the number of Americans using credit cards or loans to fund daily necessities grew. In the previous week, 35% of families used credit cards or loans to satisfy spending needs, up from 32% in November and 21% in April 2021. The increasing reliance on credit cards to cover daily expenses is a sign of the financial strain many households are facing due to inflation. With the federal government's support programmes having expired and households' savings having been depleted, families are being forced to rely on credit cards to make ends meet. This could be a precursor to a broader economic downturn and is a concerning sign for those who are already struggling due to the pandemic.

In November, the increase in credit card debt in the US was a whopping $16.5 billion, and the average credit card interest rate in Q4 2022 was 19.07%, the highest since records began in 1994. This combination of high levels of credit card debt and high credit card interest rates is potentially catastrophic for both the US economy and the strapped consumers who have no choice but to keep buying on credit while hoping next month's bill will somehow not come. At a rate of 19.07%, it would take approximately 3.5 years for the interest on your initial credit balance to double, not including any additional fees that may be charged.

In conclusion, credit cards can be a convenient and useful financial tool, but they must be used responsibly to avoid serious consequences. If you are unable to pay off the balance in full each month, it is important to be aware of the high interest rates and the potential for a high level of debt. Misusing credit cards can have serious consequences, including late fees, damaged credit scores, and financial stress, so it is important to only charge what you can afford to pay off in full each month. By using credit cards responsibly, you can avoid a credit card catastrophe and maintain financial stability.