Inflation & Consumer Credit
Inflation is a complex phenomenon influenced by various factors, but its consequences cannot be under-estimated. In such an environment, access to credit becomes increasingly crucial for individuals and businesses. While the cost of many forms of credit may increase, it’s important that consumers have access to credit, as it may allow them to bridge the gap between income and expenditures, enabling them to maintain their standard of living despite rising prices.
Inflation can also create an environment of uncertainty, where unexpected expenses can quickly derail even the most carefully planned budgets. Emergencies such as medical bills, home repairs, or sudden job loss can arise when least expected, leaving individuals financially vulnerable.
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Access to credit offers a safety net in such situations, providing funds to manage unforeseen costs and mitigate the potential long-term consequences.
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Timely access to credit can prevent individuals from falling into a cycle of debt or resorting to predatory lending options, preserving their financial well-being in the face of inflationary challenges.
Moreover, access to credit is not only essential during inflation but also plays a critical role in establishing creditworthiness and promoting financial inclusion that empowers individuals, and communities to participate more fully in the economy.
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For individuals with limited credit history or no access to traditional financial services, obtaining credit can be a steppingstone towards building a solid credit profile.
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Responsible borrowing, timely repayments, and managing credit effectively can improve credit scores and open doors to future financial opportunities.
In an inflationary period, access to credit can be vital for individuals, businesses, and overall economic stability. AFSA will continue to advocate for Americans’ access to these crucial financial tools.
May 30th, 2023
