Credit card debt is growing fast, and one possible reason is that more people are putting more expenses on plastic because they can’t cover all their bills with cash. 

That’s according to data from the Federal Reserve released Friday, which showed that revolving credit (mainly credit card debt) grew by $17.6 billion in March, bringing the total to a record $1.24 trillion. It was the highest monthly increase in more than a year and helped propel household debt up $26 billion, overshooting the $16.8 billion median forecast of economists. 

The rapidly growing pile of credit card debt could be a symptom of people relying more on credit cards and less on saved-up cash to pay the bills, research by economists at the Federal Reserve Bank of Atlanta suggests.

In a 2022 paper, researchers described the phenomenon they dubbed borrower-savers. These people had enough cash to pay either their bills or their credit card balances—but not both—and therefore carried credit card debt because they prioritized paying their bills. Anywhere from 40 to 48% of the population fall into this category depending on the year, previous research has shown.

The researchers noted that people were spending down the large reserves of cash they’d been able to build up during the pandemic, when government relief aid bolstered income, and spending opportunities were diminished amid lockdowns, and predicted the ranks of borrower-savers would only grow as savings diminished. 

“The forecast may prove prophetic,” David Pendered, a writer for the Atlanta Fed, wrote in a blog post in April highlighting the growing relevance of the research. “Information reported after the paper’s release shows that households were flush with cash when they were reducing debt, and some have returned to revolving debt now that the cash or cash equivalents have dwindled.”

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