A growing share of working-age Americans is paying for food with borrowed money, and a rising number are unable to keep up with the bill. That is the central finding of a report released Monday, July 13, by the Urban Institute, the Washington-based research organization that conducts the Well-Being and Basic Needs Survey, a nationally representative poll of roughly 10,000 adults conducted in December 2025.

The survey, which covered adults ages 18 to 64, found that 8.7 percent of respondents said they charged groceries to a credit card and then could not make the minimum payment, up from 7.1 percent when the Urban Institute last measured the figure in 2023. Kassandra Martinchek, a co-author of the report and public policy expert at the Urban Institute, said the increase may appear modest, but it represents millions more Americans falling behind on debt incurred simply to put food on the table. Missed minimum payments, she noted, often trigger penalty interest rates and fees, making them one of the clearest signs of growing financial distress.

The broader financial picture is even more concerning. 63.2 percent of working-age Americans said they used a credit card to purchase groceries during the past year, and more than one-quarter of those consumers experienced difficulty repaying the balance. Fewer than 35 percent were able to pay their credit card bill in full each month. Meanwhile, 19.6 percent reported withdrawing money from savings that had not been intended for everyday expenses, while another 5.2 percent relied on payday loans to cover grocery costs. More than half of respondents, 51.3 percent, said grocery prices had increased significantly over the previous 12 months.

Buy Now, Pay Later Has Reached the Grocery Aisle

The report also highlights the rapid expansion of buy now, pay later financing into everyday necessities. 8.9 percent of adults said they used a buy now, pay later plan to purchase groceries, and 34.8 percent of those users missed at least one installment payment.

That delinquency rate stands out for a product generally structured around four payments over six weeks. The trend affects major providers including Klarna Group, Affirm Holdings, and Afterpay, as well as retailers that offer the payment option at checkout, including Walmart, Kroger, and Target.

Klarna recently reported 119 million active consumers, a 21 percent increase from a year earlier. The company has told investors that its average customer balance is approximately $124, compared with roughly $6,900 for the average U.S. credit card balance, while maintaining that its historical loss rate has remained around 0.6 percent. The Urban Institute’s findings suggest grocery borrowers may represent a substantially different and financially more vulnerable customer base.

Lower-Income Households Face the Greatest Pressure

The financial strain is concentrated among lower-income Americans. Approximately 12 percent of low- and middle-income adults who charged groceries to a credit card failed to make the minimum payment last year, roughly three times the rate among higher-income consumers.

Those households were also about four times more likely to miss a buy now, pay later installment. More than half of lower- and moderate-income consumers who relied on credit cards for groceries carried balances rather than paying them off completely, compared with just over one-third of higher-income households.

The cost of falling behind escalates quickly. A first missed credit card payment can result in fees of up to $30, with subsequent missed payments reaching $41 each, according to industry estimates.

Food Inflation Continues to Weigh on Household Budgets

The Urban Institute attributed much of the financial stress to the cumulative rise in food prices over recent years. Grocery costs have increased approximately 32 percent over the past five years, leaving many households with little flexibility to absorb additional price increases.

Recent federal data shows that while inflation has moderated, grocery prices remain elevated. The Bureau of Labor Statistics reported that food consumed at home increased 0.2 percent in June, while grocery prices were 2.7 percent higher than a year earlier. Egg prices climbed 4.3 percent during the month, dairy products rose 1.2 percent, and meats, poultry, fish and eggs increased 0.6 percent. Coffee and nonalcoholic beverages posted modest declines.

For many families, prices are no longer accelerating rapidly—they are simply remaining stubbornly high.

At the same time, overall household debt continues to climb. The Federal Reserve Bank of New York reported that total U.S. household debt reached $18.8 trillion during the first quarter of 2026, roughly $740 billion higher than one year earlier.

Meanwhile, enrollment in the Supplemental Nutrition Assistance Program has declined following changes to federal work requirements, leaving millions fewer Americans receiving food assistance than before.

Business Implications Extend Beyond Grocery Stores

Food is typically the final household expense families reduce. Researchers warn that when consumers begin financing groceries with credit cards, savings withdrawals, or installment loans, discretionary spending elsewhere in the economy often disappears first.

That has implications well beyond supermarkets. Card issuers may face higher loss rates on consumer debt tied to basic necessities. Retailers could see shoppers trading down to lower-cost products while reducing basket sizes. Lenders extending credit for grocery purchases are financing goods that are immediately consumed, leaving no asset behind to offset potential losses.

The Urban Institute concluded that while credit cards and savings can temporarily help families weather financial hardship, relying on those resources for essential expenses over an extended period can push households into long-term financial instability if debt continues to accumulate and depleted savings are never rebuilt.

JBizNews Desk | New York

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