Spanish families turn to credit to cope with inflation

Inflation drives credit card use to make ends meet

40 euros more for electricity, another 40 for gas, 100 for groceries, 100 for the mortgage and 50 for petrol. The total doesn't add up for most Spanish families, and the solution banks are offering is the oldest one in the book: financing the shortfall with plastic. Internal data from the banks, leaked by El Confidencial, show that customers are increasingly turning to credit cards for their everyday purchases and asking to defer and split payments.

The cost of the shopping basket no longer fits in the wallet

Inflation has become an invisible tax that creeps into every bill. The extra costs cited by the banks are devastating: 40 euros more for electricity, 40 for gas, 100 for groceries, 100 for the mortgage and 50 for petrol. That's 330 euros a month that weren't in the budget. For many families, the only way to balance the books is to borrow. And not just for big purchases: for the supermarket too.

Easy credit, hard-to-stop spending

The banking sector has spotted an opportunity. Revolving cards, with interest rates above 20% in many cases, have become households' "cushion". Some analysts call them "madness" that should be illegal in any remotely serious country. But credit isn't just for emergencies. In stores like Fnac or MediaMarkt, the product's price is hidden in favour of the financed monthly instalment. A 500-euro laptop becomes "20 euros a month". The temptation is obvious, and the culture of buying on instalments is spreading like a stain.

Crisis or mirage? Full terraces and moderate debt

Some argue the apocalypse hasn't arrived: the terraces are full, mortgages are being signed at a record pace and Spanish household debt stands at 43% of GDP, far below the 64% peak reached in 2002. That reading clashes with the reality of those watching their purchasing power evaporate. Wages have been frozen since 2008 and inflation has eaten up the nominal increases. The loss of purchasing power is brutal, and credit is the painkiller masking it.

The final paradox

The puzzling figure: while families take out credit to pay for groceries, the terraces remain full. The paradox of an economy that borrows to keep consuming, but doesn't borrow to invest. The American credit score model, where debt is a virtue, is gradually taking hold. But in Spain, the "don't pay" culture lives on, and the question is how long the balance between easy credit and the bill of inflation can hold.