Americans Rely on Credit Cards for Groceries as Costs Surge

More than one in four working-age Americans who use credit cards to buy groceries are unable to pay their balance in full or miss their minimum payments, according to a new study from the Urban Institute that underscores deepening financial distress among households grappling with five years of rising food costs.

The nonpartisan think tank’s research, based on a December 2025 survey of 7,500 adults aged 18 to 64, found that grocery prices have climbed 32% cumulatively over the past five years. As a result, 63.2% of working-age Americans charged their grocery purchases to credit cards in 2025, and a growing share are falling behind on those payments, according to CBS News.

A Growing Debt Trap for American Families

The share of individuals who failed to make minimum payments on credit cards used for groceries rose from 7.1% in 2023 to 8.7% in 2025 — a 1.6 percentage point increase that represents millions of additional Americans entering a cycle of penalty fees and higher interest rates.

“What it means is that there are millions more people, when we look at the overall population of Americans, who are struggling to make that minimum payment when they’re putting groceries on their credit card,” Kassandra Martinchek, co-author of the study and a public policy expert at the Urban Institute, told CBS News. “And that feels meaningful because that financial pressure is affecting a lot of different families.”

Missing a minimum payment can trigger late fees of up to $30 for a first offense, rising to $41 for subsequent late payments. Consumers may also face a penalty APR of roughly 30%, compared with the average APR of about 24%, compounding the financial strain on already struggling households.

Middle-Class Families Hit Hardest

While low-income households have long felt the pinch of rising food costs, the new data reveals that middle-income families are experiencing the sharpest deterioration. Among those earning between 200% and 400% of the federal poverty level, missed minimum credit card payments on food jumped from 9.3% in 2023 to 12.3% in 2025, according to Fox Business.

About 12% of low- and middle-income adults who used credit cards for groceries missed a minimum payment last year — triple the rate for higher-income consumers. The study also found that lower-earning households were roughly four times as likely to miss a buy now, pay later (BNPL) payment as higher-income households.

BNPL installment plans were used by 8.9% of adults to secure food, but more than a third (34.8%) of those users failed to make an installment payment on time, signaling that alternative credit products may be creating additional debt traps for vulnerable consumers.

Savings Depleted as Inflation Persists

Approximately 20% of working-age adults tapped long-term savings — such as emergency funds not intended for everyday expenses — at least once in the past 12 months to pay for groceries, the researchers found.

The findings come amid renewed inflationary pressures. The 2026 Iran war, initiated by the United States and Israel on February 28, has driven energy costs sharply higher, with oil prices surging from roughly $70 per barrel pre-war to an average of $103 per barrel in March. US CPI rose to 4.2% year-over-year in May 2026, the highest level in more than three years, driven largely by energy costs, as reported by Food Navigator.

A May CBS News poll found that more than three-quarters of Americans say their incomes are not keeping pace with inflation, and recent inflation numbers have outpaced wage growth, causing many households to lose purchasing power.

SNAP Cuts Compound the Crisis

The financial strain is being exacerbated by a sharp decline in food assistance enrollment. About 37 million people were enrolled in the Supplemental Nutrition Assistance Program (SNAP) as of March 2026, a drop of nearly 5 million from a year earlier, following the Republicans’ 2025 “One Big Beautiful Bill Act,” which introduced stricter work requirements. Coverage from PBS NewsHour documented how eligible recipients are being pushed off the program due to increased paperwork burdens and state-level administrative challenges.

“For low- and moderate-income families, [groceries are] a really big portion of their budget, and so when food prices increase, they have much less breathing room to accommodate that,” Martinchek said.

Long-Term Outlook Remains Grim

The Conference Board’s Chief Economist Dana M. Peterson has warned that the Federal Reserve’s 2% inflation target will not be reached until at least 2028, suggesting prolonged pressure on household budgets. While June 2026 saw some moderation in food-at-home inflation (0.1% monthly), overall price levels remain elevated, and threats from fertilizer costs, tariffs, and supply chain disruptions continue to loom.

“Although access to credit and savings can provide a lifeline for families struggling to meet basic needs,” the Urban Institute wrote, “relying too much on these strategies may lead to financial instability if they have a hard time keeping up with debt or do not recover financially after drawing down savings.”

With the June CPI data scheduled for release on July 14, economists and policymakers will be watching closely for signs of whether food price pressures are finally easing — or whether American households face more pain ahead.