Americans Put More Groceries on Credit Cards as Revolving Debt Surged 14.5% in September, Its Fastest Rise in Nearly 3 Years

Americans are increasingly relying on credit cards to keep up with everyday expenses, including groceries, utilities, and fuel, as household budgets come under mounting pressure. Revolving consumer debt surged at an annualised rate of 14.5% in September, its fastest pace in nearly three years, highlighting how difficult it has become for some households to cover routine expenses without borrowing.

The latest Federal Reserve G.19 report, released last week, showed revolving credit outstanding climbed to $1.3685 trillion in September, up from $1.3522 trillion in August.

The 14.5% figure represents a seasonally adjusted annualised growth rate, rather than a 14.5% increase in balances during September itself. Nevertheless, the acceleration was significant. Revolving credit had contracted at an annualised rate of 4.4% in August, marking a dramatic reversal in borrowing activity.

The figures suggest households could be finding it increasingly difficult to balance everyday spending with their existing income levels.

Rising Household Expenses Push Consumers Towards Credit

The pressure is particularly concerning for Americans living paycheck to paycheck, for whom unexpected bills or higher grocery costs can leave little room in monthly budgets.

According to PYMNTS Intelligence research, 29.6% of cardholders who were paying their credit card bills in full less frequently than a year earlier attributed the change to higher regular expenses amid inflation concerns. Another 27.5% said their expenses exceeded their income, while just 9.2% identified a large unexpected expense as the main reason.

The findings suggest the problem is not necessarily driven by one-off emergencies. Instead, recurring household costs are making it harder for consumers to clear their credit card balances each month. Groceries, utilities, and fuel were among the most frequently cited sources of household budget pressure in a separate July survey.

The repayment difficulties were particularly pronounced among financially stretched households. In October, 40.7% of paycheck-to-paycheck consumers struggling to pay their bills said they were paying their credit card balances in full less often than a year earlier. That compares with just 4.5% among consumers who did not live paycheck to paycheck.

Credit Card Interest Adds to Financial Pressure

The growing reliance on revolving credit also carries a significant financial cost.

Federal Reserve data showed the average annual percentage rate for commercial bank credit card accounts assessed reached 22.36% in Q3. That means consumers who cannot clear their balances face substantial borrowing costs on top of the original purchases.

Meanwhile, total US consumer credit outstanding increased to $5.224 trillion in September, rising at an annualised rate of 6.4%, compared with 1.9% in August. Nonrevolving credit, which includes vehicle loans, student loans, and personal loans, increased at a slower annualised rate of 3.6% in September.

KPMG senior economist Matthew Nestler pointed to declining inflation-adjusted disposable income, weaker savings, and wage growth failing to keep pace with inflation as factors weighing on household finances.

KPMG also noted that lower-income households were increasingly using credit cards to purchase essentials. Although revolving borrowing can help families manage temporary cash-flow problems, carrying balances forward makes future paychecks less flexible.

For households already struggling with household bills, the latest trends offer another indication that everyday affordability remains a serious financial challenge.