Urban Wire Many Families Are Taking on Debt to Pay for Groceries
Kassandra Martinchek, Dulce Gonzalez
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photo of parent grocery shopping with child

Congress will soon consider another reauthorization of the Farm Bill, the legislation that sets policies and procedures for the largest and most effective program the nation has for fighting hunger: the Supplemental Nutrition Assistance Program (SNAP).

The bill markup comes at a time when the high cost of food, expiration of pandemic-era supports, and increased borrowing costs have left many families struggling to meet their basic needs. This is especially true for families with low incomes, who already spend almost a third of their household budgets on food.

Ideally, families’ incomes should be high enough to pay for groceries. But this is simply not possible for all families. In a new analysis, we found that in 2023 many families turned to credit card debt, payday loans, savings, and Buy Now, Pay Later (BNPL) options to put food on their tables. Strengthening safety net programs like SNAP could help prevent this trend.

To pay for groceries, families are turning to options that could hurt their financial stability

In our analysis of December 2023 survey data from the nationally representative Well-Being and Basic Needs Survey, we found that in 2023 about 6 in 10 adults (60.5 percent) reported using credit cards to buy groceries in 2023. This included 20 percent of adults who paid for groceries with a credit card and paid less than the full balance while always making the minimum required payment. It included another 7.1 percent paid for groceries with a credit card and did not make the minimum payment.

Share of adults ages 18 to 64 who paid for groceries with a credit card and…
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Although credit can give families a financial cushion, carrying a revolving credit card balance can be an early indicator of financial distress and can undermine families’ ability to meet their basic needs in the future.

Adults who do not pay their full credit card balance incur interest on the balance they carry over—which has become more expensive for consumers since average credit card interest rates rose to a record high of 22.8 percent in 2023. And consumers incur even greater costs if they carry a credit card balance without making the minimum payment because of late fees and penalty interest rates.

Ultimately, the costs of compounding debt can make that debt more difficult to pay down, resulting in larger debt burdens that consumers could carry for a longer period.

Share of adults ages 18 to 64 who paid for groceries with…
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In addition to credit cards, a small share of adults reported using other credit products to pay for groceries, including BNPL options and cash from a recent payday loan.

Payday loans often have short repayment periods and high annual percentage rates, making them an expensive option for families that can undermine their long-term financial stability (PDF) and exacerbate bill repayment difficulties. Meanwhile, BNPL options can provide consumers credit without credit checks and enable them to split up payments for purchases—but their use may be a warning signal that consumers are overextending their finances. And if balances are left unpaid, consumers can accrue late fees and interest or experience bank overdrafts.

Drawing down savings not intended for routine expenses to pay for groceries can erode a crucial means of weathering future financial shocks and can be another indication of financial instability. Nearly one in five adults (19.3 percent) reported that their families paid for groceries in the past year using savings not designated for routine expenses.

In 2023, use of credit card debt, savings, and payday loans to pay for groceries was increasingly common as households experienced greater food insecurity

Households experiencing food insecurity may have access to fewer resources and may need to rely on more expensive financial coping strategies to meet their day-to-day needs. 

In 2023, adults experiencing very low food security—the most severe form of food hardship—were more likely than adults reporting less severe food hardship to rely on payday loans and savings and to have trouble repaying different types of debt. Among adults with very low food security,

  • more than half (51.3 percent) drew on savings to pay for food;
  • nearly half paid for groceries with a credit card and either paid less than the full credit card balance (21.5 percent) or did not make the minimum required payment (24.7 percent);
  • half of those who paid for groceries with a BNPL option reported missing a payment (5.8 percent); and
  • 1 in 10 used cash from payday loans to pay for groceries. Although payday loans can provide loan access to consumers with poor credit who cannot access affordable mainstream options, evidence suggests (PDF) that continued and repeated use can undermine families’ financial stability and increase debt burdens to unsustainable levels.

A stronger safety net could help more Americans afford to feed their families

Although access to credit and savings can provide families a lifeline and help them smooth consumption, relying on these resources for immediate needs can lead to financial instability and unaffordable debt burdens.

As policymakers plan for the reauthorization of the Farm Bill, they can consider measures that preserve and increase the benefits SNAP households receive and eliminate barriers to SNAP so all families can access the resources they need.

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Research Areas Wealth and financial well-being
Tags Food insecurity and hunger
Policy Centers Center on Labor, Human Services, and Population
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