Americans are piling up more credit card debt as they struggle to make ends meet, and experts say it hits those who earn the least the hardest.

According to a recent report from the New York Fed, total credit card balances rose 5.8 percent year over year to $1.14 trillion. Equifax credit files through June show that credit card delinquencies continue to rise, but delinquencies on consumer loans and retail cards declined and delinquencies on auto loans remained unchanged.

People use credit cards to make all kinds of purchases. And despite the stereotype that consumers go into debt to afford a few extra fancy clothes or vacations, they often use them to pay for necessities.

So what does it mean for the economy that the average interest rate for people with credit card debt was 22.76% in May, that there is an expansion of financial technology products like buy now, pay later, and that many Americans are unable to repay their debt? It depends on your role in the economy, financial experts and economists say.

“If you’re one of the half who pays off their credit cards in full and takes full advantage of rewards and buyer protection, your life is great. That’s a very different story than someone who is trapped in this expensive cycle of 20 to 25 to 30% interest month after month,” said Ted Rossman, senior industry analyst at Bankrate.

Still, credit card debt growth has accelerated, which Rossman calls “potentially problematic.”

You can’t look at rising credit card debt without considering high living costs, such as housing prices. The Consumer Price Index, a measure of inflation, showed that housing costs rose 0.4 percent in July, accounting for 90 percent of the overall index’s increase that month.

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“Inflation definitely contributes to higher balances. Even if it’s a category like rent that most people don’t pay with a credit card, if you get squeezed on rent, you’re left with less money for groceries, gas and other things that you might now be paying for with a credit card,” Rossman said.

The Federal Reserve’s campaign to raise interest rates to reduce inflation is also affecting credit card debt and some economists say is exacerbating economic inequality. Although the Fed paused on rate hikes last year, they are still quite high and affecting credit card rates. The Fed may cut rates at its September meeting if it continues to see falling inflation data.

“People who rely on credit cards and other forms of credit to finance all sorts of things in their lives, whether it’s food, investing in their education, their home or their children. A disproportionate number of them are poor. They are really suffering from the very high interest rates,” says Rakeen Mabud, chief economist and senior fellow at Groundwork Collaborative, a progressive think tank.

“These interest rates are putting a significant strain on people’s day-to-day living and financial opportunities,” Mabud said. “It looks to me like the current high interest rates are actually causing more pain than the inflation they are meant to combat.”

In addition to the impact of the federal funds rate on credit cards, consumers are facing high annual percentage rates, which are at historic highs, according to a February report from the Consumer Financial Protection Bureau. The agency said the rising annual percentage rates are driving people into permanent debt and late payments.

The lack of competition in the lending industry is not helping those struggling with credit card debt, added Mark Zandi, chief economist at Moody’s Analytics, a provider of financial analytics products.

“There are some signs that there is less competition in this market and that credit card providers are therefore able to secure large margins,” he said.

Mitria Wilson-Spotser, vice president and director of federal policy at the Center for Responsible Lending, said she attributes the rise in credit card debt in part to the fact that some major credit card companies do not report payment data. This does not appear on consumers’ credit reports, hurting their credit scores and leaving them with higher credit card interest rates or loans without the ability to repay.

Consumers also have access to more financial technology products, such as payroll access programs that allow workers to access their pay earlier for a fee, and pay-now-later products, Wilson-Spotser said. These products are not subject to the same regulations as credit cards. The Consumer Financial Protection Bureau issued a rule in May that would make pay-now-later lenders subject to the same regulations as traditional credit cards.

“There is no obligation to ensure the consumer’s ability to repay, so these debts, which are somewhat of a phantom in the room, combine with credit card debt, which I think is one of the reasons why we are seeing an increase in delinquencies among some consumers,” she said.

Zandi said the lowest-income people who suffer most from their credit card debt account for only a fraction of the consumer spending that drives the economy.

“(High interest rates) put pressure on households with revolving debt who are not paying off their credit cards and are using the credit cards as a source of credit to pay off debt. So that’s a real problem for those households,” Zandi said. “The economy can move forward and it can do well even if people in the bottom third are struggling. The economy can’t thrive, but it can do what it does.”

But that does not mean that the damage caused by high credit card interest rates and inflation that is cooling but still hurting households has gone unnoticed, Zandi said, pointing to increasing political pressure to improve people’s economic situation.

“But the political and social impact is enormous. You can see that in the political divide and the presidential election,” he said. “Policies are affected by the fact that the share of low-income households has declined compared to the peaks in the late ’70s and early ’80s.”