Impulse Buying Is Up. Does It Make Any Financial Sense?
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Here's your Money Briefing for Tuesday, September 13th. I'm Daniela Cheslow for The Wall Street Journal, filling in for J.R. Whalen. Have you felt your impulse control wearing away recently? You're in good company. Credit card balances are going up nationwide. And one reason is Americans are pulling the trigger on frivolous purchases.
People are uncertain about the future. They are hearing about recessions. They are hearing about potential economic downturns. And they're thinking... What can I do to feel like I have some control over my finances? And the way they're doing that is by treating themselves.
Julia Carpenter covers personal finance for The Wall Street Journal. She'll be here to talk about why people are spending like there's no tomorrow after the break.
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Prices are up on everything from gas to household goods. But inflation is not to blame for all of Americans rising spending. There's also good old fashioned splurging. So what is making us so spendy? Julia Carpenter covers personal finance for The Wall Street Journal. And she's here now to talk about why Americans are buying more stuff just because and whether it might be worthwhile. Hi, Julia.
Why are credit-card balances rising across the U.S. right now?
Hi. Hi, Daniela. Thank you for having me. Thank you for being here. Julia, you came at this topic from personal experience, and that includes buying some things that maybe in the past you would have skipped. Tell me about some of your recent impulse buys.
So many. Glossier has this new lavender eyeliner that I just immediately decided I had to have.
How much was it?
$16, which is, you know, not normally what I'm spending on eyeliner. I went on Etsy in the middle of the night and just decided that I had to have this t-shirt that was screen printed with one of my favorite works of art. That was $30. And then I think the purchase that made me sort of analyze this was I bought this two foot tall minimalist neon sculpture for my house. $126.
You're not alone here. American credit card balances are rising across the board. Tell me about the shape of that rise. And is this about inflation or something more?
Credit card balances are up. They're up significantly. Between the first and the second quarter of 2022, credit card balances increased by $46 billion. That second quarter figure is up 13% from last year. So that's the largest rise in almost two decades. And inflation right now is at a four-decade high. So a lot of this is people having to spend money on things. They have to spend money on gas, on groceries, and they have to put that on a credit card. Some of it is people like me who we are spending more on everything because of inflation, but because we are doing that, we're also just sort of adding things to our cart and adding things to our credit card balance that I don't think you could characterize as essential.
You've been talking to some finance experts. What do they say about why people are spending more?
So some people spend more because they're actually being smart.
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