A report this month from the Federal Reserve Bank of New York showed a trend that seems to speak to where Americans stand amid challenging economic times.
The report revealed that household debt jumped by 2%—or about $312 billion—during the second quarter of 2022, the period from April 1 through June 30.
That quarterly increase underscores how consumers have struggled with 40-year-high inflation and rising gas and food prices.
While dollars aren’t going as far as they did last year, some Las Vegas financial experts say consumers can make changes to ease the sticker-shock pain.
Brian Formisano, Wells Fargo’s regional banking director for the Las Vegas market, said credit cards, when used correctly, can be game-changers. The trick is to refrain from carrying a balance, from which credit card companies and banks make money with interest rates near or above 20%.
“I think rewards programs, especially credit card rewards programs, are important,” Formisano said. “It’s a great way to offset the rising costs people are seeing. What it comes down to is having good discipline and processes that can help.”
The “processes” of which Formisano speaks could be anything from recurring payments to bill alerts.
“Mobile alerts, text alerts, push notification alerts, we have all of those at Wells Fargo, and I know a lot of the other banks offer those, too,” Formisano said. “Put spend and budget alerts in place, so you know where you stand at any given time.”
Jennifer Ronquillo, a senior vice president for Bank of America in Las Vegas, said it’s important for consumers to look for ways they can earn when they spend.
That could be in the form of a card that offers a certain percentage of cash back for purchases—often between 1% and 3%—or a card that offers a certain percentage off purchases from a specific retailer.
Two of the most popular cash-back credit cards include Chase’s Freedom Unlimited card and the Discover It card. Those offer 5% off on certain categories—such as grocery stores or gas stations—that change every few months. Many banks, including Wells Fargo and Bank of America, offer retailer discounts for their debit and credit card holders.
“We always encourage clients to utilize solutions that will give money back,” Ronquillo said. “One of those avenues is cash back. You need to buy groceries no matter what, but you benefit from buying groceries on your cash-back credit card versus paying with your debit card.”
According to a national study conducted by Wells Fargo in June, nearly half of all rewards credit card holders said they have started to lean on those rewards to help offset rising everyday expenses.
More than 70% of adults, according to Wells Fargo, have a credit card that offers rewards for purchases.
More than half of those surveyed said their credit card use has increased since the onset of the pandemic.
Krista Phillips, head of branded cards and marketing for Wells Fargo’s credit card division, said the study reinforces the “significance of rising inflation and supply chain issues, and how American consumers have been affected in so many ways.”
Formisano added that it often helps to have a relationship with a banker or a financial expert. These days, more people tend to do their banking almost exclusively online. There’s nothing wrong with that, he said, but he still tells people it’s good practice to develop relationships.
“A banker’s job is to help people become successful financially,” Formisano said. “Your banker is equipped with the right tools to be able to help people look at the expenses and look for areas where changes or improvements can be made.”
Some consumer expenses have retreated a bit lately.
According to the AAA motorist club, the average price for a gallon of unleaded gas in Nevada was $5.05, down from $5.90 in early July but still significantly more than the national average of $4.16, as of August 3.
On August 3, 2021, the average price of a gallon of gas in Nevada was $4.02, according to AAA. Since many goods are shipped via truck, the higher gas prices have led to higher prices for many items.
“[Interest] rates have been rising, there’s the high price of housing, gas costs, food prices,” Formisano said. “We want to be there to help [people] who might be making tough decisions these days.”
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This story originally appeared in Las Vegas Weekly.