The share of U.S. adults who were using credit cards or loans to make ends meet amid rising prices rose to nearly 40% in October 2023, up from roughly 37% a year prior, according to research from the Federal Reserve Bank of Boston. 

Also, about a third (34%) of adults who lived in a household experiencing a job loss used a credit card or a loan to handle price increases. Gen Z and millennials were the age groups most likely to use loans and credit cards to respond to higher prices, though other demographic factors were at play in the former being above the mean, the report said. 

Consumers who had some college education, or who earned between $35,000 and $75,000, were more likely to use credit cards and other loans to withstand rising prices, the Boston Fed said in the report. 

Consumer prices rose 2.9% over the previous 12 months ending in July, constituting the smallest annual increase since April 2021, according to the Consumer Price Index’s latest figures. Though inflation has continued to decline, researchers at the Boston Fed concluded it will take time for the initial shock of inflation to wear off, particularly for low-income households and people who’ve experienced a recent job loss.  

Besides relying more on credit cards, the Boston Fed said consumers were taking other measures to cut costs. Per its report, consumers have reduced their spending by eating less restaurant food, canceling subscriptions, purchasing less fresh produce and meat and switching to generic products. Survey respondents also reported contributing less to their savings, working more, moving to less expensive housing and delaying significant purchases, according to the report. 

As consumers turn to their credit cards to afford their purchases, the Federal Reserve has also tracked the rise in credit card debt balances. In Q2 2023, credit card debt surpassed $1.03 trillion, according to the Federal Reserve Bank of New York’s Center for Microeconomic Data. A year later, in the second quarter of 2024, credit card balances reached $1.14 trillion.