Urban Institute Survey: Over 1 in 4 Adults Rely on Credit Cards for Groceries and Struggle to Repay

Knowledge Snapshot: Credit Cards for Groceries

• Core Subject: Urban Institute Well-Being and Basic Needs Survey findings on food affordability and household debt.
• Key Statistics: Over 28 percent of working age adults charged groceries to credit cards and encountered repayment challenges; 8.7 percent missed minimum payments entirely.
• Alternative Financing: Nearly 10 percent used Buy Now, Pay Later (BNPL) for food with a one-third default or missed payment rate; 5.2 percent turned to payday loans.
• Primary Driver: Cumulative food inflation exceeding 30 percent over five years, disproportionately impacting low and moderate income households.

Quick Answer

The Urban Institute Well-Being and Basic Needs Survey reveals that more than one in four working age adults rely on credit cards to buy everyday groceries and struggle to repay those balances. Rising food prices have forced millions of households to drain emergency savings, utilize high risk Buy Now, Pay Later programs, or resort to payday loans to cover basic nutritional needs.

Introduction

For generations, buying groceries was considered a non-negotiable weekly expense managed directly out of current income. Today, persistent inflation and elevated food prices have fundamentally altered how households secure basic sustenance. According to the Urban Institute Well-Being and Basic Needs Survey, over one in four working age adults now rely on credit cards to purchase groceries, and a significant portion of those consumers are struggling to keep up with monthly debt payments.

When fundamental household expenses outpace stagnant wages, families are forced into difficult financial compromises. Understanding the scope of these challenges requires examining granular data regarding credit card reliance, alternative financing methods, and the underlying economic pressures driving households toward debt.

The Scale of Credit Card Reliance for Grocery Shopping

The latest data from the Urban Institute highlights a troubling shift in consumer borrowing patterns. Among working age adults aged 18 to 64 who used a credit card to pay for groceries, the repayment breakdown illustrates widespread financial strain:

• Paid in Full: Only 34.9 percent of respondents paid their credit card statement in full when due.
• Carried a Balance: 19.6 percent paid less than the full balance but managed to make at least the minimum required payment.
• Missed Minimum Payments: 8.7 percent failed to make even the minimum payment on charges accumulated for food.

Combining those who carried rolling balances with those who missed payments demonstrates that more than 28 percent of grocery credit card users experienced tangible repayment hurdles. Compared to prior survey waves, missed minimum payments increased from 7.1 percent, signaling a steady erosion of financial safety nets among working families.

The Hidden Pressures of Food Inflation

Why are millions of Americans leaning on plastic for basic meals? The primary catalyst is cumulative inflation. Over a five year span, food prices climbed significantly, placing immense pressure on household cash flow.

Respondents who reported that their grocery expenses increased “a lot” over the past year were drastically more likely to take on high interest debt. In fact, consumers facing severe food price inflation were more than twice as likely to miss minimum payments on grocery credit card balances compared to households experiencing moderate price increases.

Income Disparities and Vulnerability

Financial vulnerability is not distributed evenly across demographics. Low and moderate income households experience these shocks far more acutely than higher income earners. While higher income families frequently use credit cards for rewards while paying balances in full, low income adults are often forced to use revolving credit out of pure necessity. More than half of low income adults who charged groceries failed to pay their full statement balance.

Alternative Borrowing: BNPL and Payday Loans

When traditional credit cards reach their limits, consumers frequently turn to alternative, high risk financial instruments to keep food on the table.

+------------------------------------------------------------+
|                Alternative Grocery Borrowing               |
+------------------------------------------------------------+
|  Buy Now, Pay Later (BNPL): ~10% used, ~33% missed payment |
|  Payday-Style Loans: ~5.2% used (higher in low-income)     |
|  Long-Term Savings Draining: ~20% of adults                |
+------------------------------------------------------------+

Buy Now, Pay Later Services for Food

Approximately 10 percent of working age adults utilized Buy Now, Pay Later (BNPL) options to purchase groceries. While platforms like Affirm, Klarna, Afterpay, and similar installment tools offer perceived flexibility, roughly one third of these grocery BNPL users missed a payment. Missing installments on short term credit products triggers steep late fees and damages credit scores.

Payday Loans and High Cost Credit

Emergency borrowing extends even further into predatory territory. Roughly 5.2 percent of adults reported using payday style loans to buy groceries. Among low income working age adults, that figure nearly doubles to approximately 1 in 11 individuals. These short term loans carry triple digit annual percentage rates, trapping vulnerable consumers in compounding debt cycles.

Draining Long Term Savings and Retirement Funds

Beyond consumer debt, households are cannibalizing their future security to pay for present consumption. The Urban Institute survey revealed that nearly 1 in 5 adults dipped into long term savings accounts not intended for daily expenses, such as retirement funds or emergency reserves, just to cover basic food costs. Among low and middle income brackets, that proportion climbs to roughly 1 in 4 individuals.

Draining retirement accounts prematurely incurs heavy tax penalties and forfeits decades of compound growth, creating long term financial insecurity simply to manage short term grocery inflation.

What You Can Do: Practical Strategies to Protect Your Budget

Navigating persistent food inflation without falling into debt requires proactive cash flow management and deliberate budgeting adjustments. Consider implementing the following steps:

1. Audit Your Food Spending: Track every dollar spent on groceries versus dining out for 30 days. Identify bulk buying opportunities, generic brand swaps, and meal planning strategies.
2. Utilize Structured Budgeting Tools: Use comprehensive financial dashboards and budgeting platforms like Empower, Monarch Money, YNAB (You Need A Budget), or NerdWallet to monitor cash flow and prevent unexpected shortfalls.
3. Build an Emergency Buffer: Automate small, consistent transfers into a dedicated high yield savings account to avoid relying on credit cards when unexpected expenses arise.
4. Explore Community Resources: If grocery costs threaten your housing or utility payments, utilize local food banks, community pantries, and supplemental nutrition programs as temporary bridges.
5. Prioritize High Interest Debt: If you already carry credit card balances from grocery purchases, explore balance transfer cards or structured debt management plans through accredited credit counseling agencies to lower interest rates.

Frequently Asked Questions

What is the Urban Institute Well-Being and Basic Needs Survey?

The Well-Being and Basic Needs Survey is a nationally representative survey conducted by the Urban Institute that tracks how economic conditions, policy changes, and inflation impact the financial well-being and basic needs of U.S. working age adults.

Why are so many people using credit cards for groceries?

Persistent inflation over recent years has raised the cost of everyday essentials faster than wage growth. When cash reserves are depleted, households use credit cards to bridge the gap between paychecks and grocery bills.

What percentage of adults missed minimum credit card payments for groceries?

According to the December 2025 survey data, 8.7 percent of working age adults who used a credit card for groceries failed to make the minimum payment, up from 7.1 percent in 2023.

Is using Buy Now, Pay Later for groceries a good idea?

Using BNPL for groceries is generally risky. While it splits payments into installments, missing a payment leads to fees and negative credit reporting. Exploring traditional budgeting and emergency funds is a safer approach.

How does food inflation impact low income families differently?

Low income households spend a much higher percentage of their disposable income on food. When prices rise, they have less financial cushion, forcing them to rely on high cost debt or drain long term savings.

What are the dangers of using payday loans for food?

Payday loans carry extremely high interest rates and fees. Borrowers often find themselves unable to repay the full amount on their next payday, leading to rollover fees and severe financial distress.

How can I stop relying on credit cards for basic necessities?

Stopping reliance on credit cards requires creating a realistic monthly budget, reducing discretionary spending, building a small emergency fund, and exploring local community food assistance programs.

Sources and Methodology

• Urban Institute Research Publication: Many Families Rely on Credit and Savings to Afford Groceries
• Urban Institute Data Tool Analysis: Food Prices and Credit Card Debt Insights
• Methodology: Analysis based on the December 2025 wave of the Well-Being and Basic Needs Survey, examining economic hardship, credit card utilization, and borrowing behaviors among nonelderly U.S. adults.