*Millions of American consumers are fast relying on credit cards, savings, and even ‘buy now, pay later’ financing/loans to pay for groceries, according to a new Urban Institute report
Isola Moses | ConsumerConnect
Despite reported considerable reduction in inflationary trend in the United States (US) economy, millions of American families and consumers are still tapping savings, carrying credit card balances, and turning to “buy now, pay later” (BNPL) financing just to put food on the table.
ConsumerConnect gathered the development underscored the financial strain that continues to weigh on household budgets amid easing inflation in the US.
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A new report from the Urban Institute found that grocery bills remain a major source of financial stress after food prices climbed about 32 percent over the past five years.
While inflation has slowed from its pandemic-era highs, several families have continued to struggle with the cumulative increase in food costs, report noted.
The latest analysis, based on the Urban Institute’s nationally representative 2025 Well-Being and Basic Needs Survey, found that over one-quarter of working-age adults relied on some form of debt or savings to purchase groceries.
The findings at a glance
Among the findings: About 34.8 percent of adults ages 18 to 64 said they use a credit card to buy groceries but pay the balance in full each month.
Another 19.4 percent said they carry a balance but at least make the minimum payment.
Nearly 8.7 percent reported they do not always make even the minimum payment on grocery-related credit card debt, up 1.6 percentage points from 2023.
Nearly 20 percent said they dipped into non-emergency savings to pay for groceries.
Almost 10 percent used buy now, pay later financing for food purchases, and more than one-third of those borrowers said they had missed at least one payment.
Researchers also reported the increase in missed payments suggested financial conditions had worsened for several households over the last two years.
Lead researcher Kassandra Martinchek said in the report that “the challenge is, are folks able to effectively repay their credit card or buy-now-pay-later debt without experiencing hardship or putting their future financial stability at risk?”
Middle-income households feeling the pressure
The report found that repayment struggles are not confined to lower-income families.
Households with incomes between two and four times the Federal poverty level experienced one of the sharpest increases in missed minimum payments on grocery-related credit card debt since 2023. Researchers also said that suggested financial pressure was spreading beyond traditionally vulnerable households.
The findings come as Americans continue to carry historically high levels of credit card debts. Although some consumers have become more diligent about paying balances in full, several others have continued to rely on revolving credit for everyday necessities, including groceries, the study found.
On the role of bad choices
Marcus Sturdivant, founder of The ABC Squared, a registered investment advisory firm, says some of the ways consumers are using BNPL are far beyond the scope of its intention.
Sturdivant told ConsumerAffairs: “The goal of this system (BNPL) was to bridge a purchase for families, at zero interest in most cases, for something not quite a need but that is very high on the want list.
“They could make several installments to pay this debt off while increasing current cash flow. That is nearly utopian, and anyone who knows human fallacies should see the potential downfalls.”
The problem begins when the consumer makes multiple BNPL purchases and is presented with multiple payment demands four weeks after the purchases.
The problem is magnified, Sturdivant told us, when consumers begin using BNPL for everyday purchases.
He equally cited a recent interview with a woman who is now deep in debt.
Sturdivant said: “She lives with her parents as an adult. She ordered food delivery, the total was $40, and she split the payment.
“The payments were split not because she could not afford the total, but it simply seemed easier to pay less now.
“That is it! That is what the world is missing. A complete mindset shift in consumers, and it is not pretty.”
Long-term financial risks
Using credit cards or savings to cover grocery expenses can help families weather temporary financial setbacks.
But researchers warn that those strategies become problematic when they persist over time.
Carrying high-interest credit card balances can make it harder for households to recover financially, while repeatedly drawing down emergency savings leaves families more vulnerable to unexpected expenses such as medical bills, car repairs, or job losses.
The Urban Institute suggests that strengthening food assistance programs and helping eligible households enroll in benefits such as the Supplemental Nutrition Assistance Program (SNAP) could reduce reliance on costly borrowing while improving food security.