Recent data reveals that nearly 40% of American credit cardholders have maxed out their cards or come close since the Federal Reserve began raising interest rates in March 2022. This trend is largely driven by high inflation and rising living costs, forcing many to rely on credit to cover essential expenses. The consequences of maxing out credit cards are severe, with 88% of those affected reporting negative impacts on their personal finances, including diminished credit scores and the inability to afford necessary expenses. Low-income households, parents with young children, and Generation Xers are particularly vulnerable, with significant portions of these groups experiencing credit crunches. The article emphasizes that high credit utilization ratios can lead to missed payments, further exacerbating financial stress. Experts suggest strategies for managing credit utilization, such as making multiple payments each month and seeking credit limit increases, to help consumers regain control over their finances.
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