One-Third of Americans Using Credit Cards to Pay for Higher Energy Costs

Almost one third (31%) of Americans say they are using more credit to pay the higher prices for energy and other consumer goods resulting from Hurricane Katrina, according to the Cambridge Consumer Credit Index. 19% say they are using less credit, while 50% say they are using the same amount of credit as they did a year ago.

“The results of the Cambridge Consumer Credit Index wildcard question show that higher prices for energy and other consumer items brought on by the aftermath of Hurricane Katrina are causing a large amount of Americans to use more credit than they did a year ago because they just don’t have enough income to pay these higher costs. Lower income Americans are feeling the pinch most, since they have little discretionary income to start with,” says Jordan Goodman, spokesperson/financial analyst for the Cambridge Consumer Credit Index.

These findings are the result of monthly nationwide telephone poll of 800+ adults conducted by ICR/International Communications Research in the past week, sponsored by Cambridge Credit Counseling Corporation.

The overall Cambridge Consumer Credit Index fell by three points in October to 62. Use of credit rose slightly in the past month and but consumers expect to use less credit in the coming month and six months. The “Reality Gap,” which is the difference between the amount of debt consumers say they will pay off in the next month versus the amount of debt they actually paid off a month later, fell by two points from September to 21 percentage points. A month ago, 80% of Americans planned to pay off debt, while a month later only 59% actually did so.

Chris Viale, President & C.E.O. of Cambridge Credit Counseling Corp. said, “The fact that people are increasing their use of credit to cover higher energy costs offers yet another example of the importance of budgeting and saving. In some cases, incomes just are not sufficient to keep up with rising prices. Consumers in this position really need to evaluate how they can use less energy. Simple steps like wearing a sweater instead of turning the heat up will help keep costs down. Everybody should contact their utility providers and inquire about any budget plans that may be available. For those of us that are still spending more on our wants than our needs, now is the time to make a budget and savings plan in addition to using less energy. Cambridge Credit Counseling’s financial education website www.GoodPayer.com can help you get started today.”