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Lower-Income Families Going into Debt for Groceries: Report

Urban Institute study finds that inflation-strapped consumers are dipping into savings or extending credit debt to pay for everyday staples
Lynn Petrak, Progressive Grocer
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Food-insecure households are increasingly racking up credit card debt to pay for groceries, a report shows.

Although grocery prices are now falling across several categories and reaching pre-pandemic rates of inflation, many consumers are still feeling squeezed and speaking out on social media and other forums. This week, the Urban Institute, a nonprofit think tank and research organization, founded by President Lyndon Johnson in 1968, reported that a contingent of shoppers have gone into credit card debt because of the cost of everyday essentials.

According to study released by the Urban Institute on May 14, 17.8% of adults reported using credit cards, or buy-now-pay-later (BNPL) payment methods, in the past year and 37% who used BNPL for groceries reported missing payment on those loans. In addition, nearly one in five adults said that they have paid for groceries with savings that they did not intend to use for routine living expenses.

[RELATED: Members of Congress Press Biden to Flex Power on Food Prices]

Debt repayment challenges are more common among adults with very low food security. Nearly half of those in this category paid for groceries with a credit card and either paid less than the full credit card balance or did not make the minimum required payment. 

“These findings suggest that many families used savings or credit from credit cards, BNPL, and payday loans to pay for groceries, with families who already struggled to meet their food needs facing starker repayment challenges,” concluded the report’s authors, Kassandra Martinchek and Dulce Gonzalez.

The authors underscored the importance of the Supplemental Nutrition Assistance Program (SNAP) and other programs that can extend credit to help families cover their costs or provide debt management services.

In general, credit cards remain a popular method for grocery purchases. According to the report, more than a third of grocery transactions are made using credit cards, with 60.5% of adults reporting that their families have used that method at some point during that year. While 20% reported that their families paid less than the full balance, most adults who reported using credit cards to buy groceries paid off their bills in full.

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