Fed Report Highlights Need for Credit Access
The New York Federal Reserve released a report on Tuesday noting that credit card debt in 2022 has surged in the second quarter, up $46 billion or 5.5% as compared to the first quarter. “Americans are borrowing more, but a big part of the increased borrowing is attributable to higher prices,” the report noted.
The report is a good reminder that credit cards are a great financial resource to cover unexpected costs or needs. Credit cards give consumers the financial flexibility they otherwise might not have with their savings. In an inflationary period like the present, credit cards can be an important lifeline as parents prepare to send kids back to school and Americans fill their cars’ tanks and grocery carts.
Credit cards, however, are a form of credit not always available to all U.S. consumers. In fact, millions do not have access to this form of credit, perhaps due to financial missteps, a less than perfect credit report or the lack of a bank account.
Every consumer, regardless of financial position, should be able to access some form of credit when they require it. Traditional installment loans serve that purpose, leveling the financial playing field for millions of consumers who may not be able to access credit cards. And, in many ways they’re better for it. Traditional installment loans provide equal monthly payments and clear terms, so families can plan their expenses. Lenders determine the borrowers’ ability to repay and payment history is reported to credit bureaus.
It’s crucial that state and federal legislatures and regulatory agencies work to maintain access to safe, responsible credit options, especially in a times of strain on household budgets.
August 4th, 2022
