The average amount of credit card debt has declined over the past several months, but many families are still struggling to pay basic necessities. Based on a recent survey, 40% of low- and middle-income families have used credit cards to pay for basic living expenses this past year because they didn’t have enough money on hand to pay for those expenses. Basic living expenses include things like mortgage payment, utilities, groceries, and insurance.

The statistic come from Demos’ 2012 National Survey on Credit Card Debt of Low- and Middle-Income families included 997 American families who carried credit card debt for three months or more. Demos similarly surveyed American families in 2005 and 2008. Overall, the results show much progress since 2008. However, families are still wrestling with financial trouble.

Families might have spent more on their credit cards except that they experienced tighter access to credit following the economic crisis and passing of the Credit CARD Act of 2009. According to the survey, 39% of households had a limited access to credit because their cards were cancelled, the credit limit was reduced, or they had a credit card application denied. And 48% of those households would have charged expenses to their credit card had they not had their access reduced.

While many families are using their credit card to pay for basic living expenses, some are also suffering from expenses related to unemployment and high medical bills. According to the survey almost half the households had some credit card debt from medical expenses. More alarming, 86% had expenses due to unemployment within the previous year.

It’s not all bad news. Thanks to the Credit CARD Act’s billing statement disclosure requirements, more households are paying down their balances faster (33%)and fewer are paying late (28% down from 50% in 2008). The minimum payment disclosure tells cardholders how much the minimum payment is costing them and how much they’d save by paying off balances within three years. Likewise, the late payment disclosure shows the consequences of paying late.

There’s seldom an easy way out of a financial bind. Credit cards are just a temporary, and potentially costly, fix to the bigger problem. At some point, credit will run out. Many families have probably already seen this happen considering the number of cancelled cards and credit limit reductions reported by Demos’ survey. Once credit is longer an option, families have to try to survive only on their income, however meager it might be. And, to make things harder, they’ll have a hefty credit card balance to repay. Keeping credit card balances low during hard times is actually better than running up balances in an attempt to survive.

Make your cash reserves last longer by cutting way back on expenses at the first sign of financial trouble. Get rid of extra services like cable and internet. Use less electricity and water. Turn off the home phone and reduce your cell phone plan. Reduce your grocery bill and stop eating out. These are tough measures, but they’re exactly what’s needed to get you through a tough time.

Source: Demos.org