Rising Gas Prices Push Americans to Rely on Credit Cards and Buy Now, Pay Later Options
Americans lean on credit cards and buy now, pay later as gas prices eat bigger share of income
Fox Business
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As gas prices exceed $4.50 per gallon, American households, particularly lower-income ones, are increasingly relying on credit cards and buy now, pay later schemes to manage their budgets. A report from the Bank of America Institute reveals that lower-income households now spend 4.2% of their income on gas, the highest for March since 2022.
- 01Lower-income households are spending 4.2% of their income on gas, up from 3.9% last year.
- 02Gas prices have surged over 40% due to the ongoing conflict in Iran, pushing national averages above $4.50 per gallon.
- 03Lower-income households are experiencing only 1% wage growth, compared to over 5% for higher-income households.
- 04Around 10% of lower-income consumers spent more than 10% of their income on gas in March.
- 05Households across income levels have about 10% higher savings deposits compared to pre-pandemic levels.
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American households are feeling the financial strain from rising gas prices, which have surged over 40% due to the conflict in Iran, pushing national averages above $4.50 per gallon. According to a report by the Bank of America Institute, lower-income households are particularly affected, spending 4.2% of their income on gas, up from 3.9% last year. In contrast, the average household across all income groups spent about 3.1% of their income on gas in March, an increase from 2.8% a year prior. Notably, 10% of lower-income consumers reported spending more than 10% of their household income on fuel. While higher-income households have seen wage growth of over 5%, lower-income households have only experienced 1% wage growth. To cope with these challenges, many consumers are turning to credit cards and buy now, pay later options to manage their finances, although these solutions provide only temporary relief. On a positive note, households across income levels have increased their savings deposits by 10% compared to pre-pandemic levels, partly due to higher tax refunds.
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The rise in gas prices is straining household budgets, particularly for lower-income families who are spending a larger share of their income on fuel. This could lead to increased reliance on credit, affecting their financial stability.
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