The Debt Aftershock: A State-by-State Look at How Inflation Fueled a Surge in Credit Card Use

Over the past several years, inflation has eroded the purchasing power of many American households, driving up the cost of essential goods and services. As wages failed to keep pace with rising prices,¹ millions turned to credit cards to manage day-to-day expenses, leading to a surge in consumer debt. What began as a temporary solution to cope with higher costs has now created new financial strains, as many households are facing mounting balances with high interest rates.

Even as inflation moderates,² the aftershock of increased credit card usage is becoming clear through rising delinquency rates.³ Consumers who leaned heavily on credit are now struggling to keep up with their payments, highlighting the long-term consequences of inflation-driven borrowing. Despite broader economic conditions beginning to stabilize, financial stress and increased reliance on credit cards continue to linger among households across the country.

Stress Over Inflation by Age and Household Income

Stress related to recent inflation decreases with age and income. Image Credit: Upgraded Points

According to data surveyed by the U.S. Census Bureau from August 20 to September 16, 2024, over 88% of adults in every age group expressed that they felt stressed about recent price increases. The most stressed age group was people aged 25 to 39, who are relatively early in their careers and may not have savings, investments, or credit to fall back on.

Inflation-related stress was also a widespread concern across income levels. In every income bracket below $200,000, more than 90% of people reported feeling stressed about inflation. Even among the highest earners, who made above $200,000, nearly 85% felt stressed about recent price increases.

States Where Inflation Drove Increased Reliance on Credit Cards

Utah residents increased their credit card usage the most to cope with inflation. Image Credit: Upgraded Points

Consumers adopted a variety of strategies to cope with the effects of inflation, including 24% of adults using credit cards, loans, or pawnshops to help pay their increased costs. Reliance on credit can be a quick way to help make ends meet in the short term, but doing so can be a risky move financially. People who carry balances on their credit cards or pay off loans slowly will ultimately pay more in interest — a risk exacerbated by the fact that credit card interest rates have risen dramatically.

However, U.S. households did not turn to credit cards in equal measure, and there are geographic differences in where adults used credit cards more frequently to cope with inflation. Hawaii (17.9%) and Wisconsin (19.0%) were the only 2 states to report a share of increased credit card usage under 20%. Additionally, some areas in the South and Northeast were less likely to experience increased credit card usage to cope with price increases.

In contrast, Utah stands out, with nearly 1 in 3 adults reporting increased credit card usage to manage rising prices. Florida (28.8%) and Arizona (28.7%) had the next highest percentages of adults reporting increased reliance on credit cards.

States and Metros Where Inflation Fueled a Surge in Credit Card Reliance

Below is a complete breakdown of inflation-driven increases in credit card reliance for the largest 15 metropolitan areas and all 50 states.

Upgraded Points conducted the analysis using the latest data from the U.S. Census Bureau. Credit card reliance data was collected between October 18 and October 30, 2023, while inflation-related stress data was collected between August 20 and September 16, 2024. For more information, see the methodology section below.

Methodology

To find the states where inflation is driving increased reliance on credit cards, researchers at Upgraded Points analyzed the latest available data from the U.S. Census Bureau’s Census Household Pulse Survey. Data on increased usage and reliance on credit cards was collected from October 18 to October 30, 2023, and data on stress and concern about price increases was collected from August 20 to September 16, 2024.

Researchers ranked U.S. states and select metropolitan areas according to each location’s share of adults that increased their use of credit cards, loans, or pawn shops to cope with price increases in the prior 2 months (among respondents who perceived price increases during that time). Researchers also calculated the share of adults who relied on credit cards or loans to meet spending needs in the prior 7 days (among all respondents), the share of adults stressed about price increases in the last 2 months (among respondents that perceived price increases), and the share of adults concerned about price increases in the next 6 months (among all respondents).

Final Thoughts

Over the past several years, rising inflation has eroded the purchasing power of American households, leading many to rely on credit cards to manage daily expenses. This shift has caused a surge in consumer debt, with mounting balances and high interest rates creating new financial strains. As inflation continues to moderate, the repercussions remain and are evident in rising delinquency rates, highlighting the long-term consequences of inflation-driven borrowing even as the broader economy stabilizes.

The stress caused by inflation is widespread across age and income groups. Nearly 90% of adults in every age bracket reported feeling stressed about recent price increases, with those aged 25 to 39 being the most affected due to potentially lacking savings or credit reserves. Similarly, more than 90% of individuals earning below $200,000 felt stressed, and even among the highest earners making over $200,000, approximately 85% reported stress related to inflation.

Geographically, the reliance on credit cards to cope with inflation varies across the U.S. States like Utah saw nearly 1 in 3 adults increasing credit card usage to manage rising prices, while Hawaii and Wisconsin reported the lowest increases, with under 20% of adults turning to credit cards. This variation underscores the diverse impact of inflation across different regions as households adopt various strategies to manage financial pressures.

References

1. U.S. Bureau of Labor Statistics. (2023, February 13). Commissioner’s Corner. Retrieved on September 30, 2024 from https://www.bls.gov/blog/2023/more-ways-to-look-at-wages-and-inflation.htm.
2. U.S. Bureau of Labor Statistics. (2024). Graphics for Economic News Releases. Retrieved on September 30, 2024 from https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm.
3. Board of Governors of the Federal Reserve System. (2024, August 19). Delinquency Rate on Credit Card Loans, All Commercial Banks. Retrieved on October 4, 2024, from https://fred.stlouisfed.org/graph/?g=1uVs0.