Inflation Already Impacting American Buying Behavior, Credit Card Usage – Forbes Advisor

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You don’t have to follow the news to know inflation is raging. Walking up and down grocery store aisles makes that point quickly enough and filling up your car’s gas tank costs more week after week. In fact, inflation in May 2022 was up 8.6% from the past twelve months, not seasonally adjusted, according to the US Bureau of Labor Statistics.

A new survey for Forbes Advisor asked Americans about how inflation has affected their lives—and how they expect it to change in the foreseeable future. The impacts are already significant, with 85% of voting that they’ve changed the types of purchases they make.

Here’s how Americans’ purchasing behaviors lean today.

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With Rare Exception, Household Budgets Are Strained

At current expense levels, most households don’t have much room to budge, according to this survey. A quarter of selected selected that they only have a little wiggle room in their current budgets—if inflation continues to rise, that slack will tighten until it disappears completely. As it is, 27% of respondents’ budgets are already at the limit and another 26% are over budget.

Of the remaining survey respondents, less than 10% had “a lot” of space left in their budget with the others either not tracking budgets or choosing not to disclose their financial situation.

To make ends meet, approximately 40% of respondents with credit cards now rely more on them. As for a balance, 26% of respondents have recently started carrying them on their credit cards, in addition to the 38% who were already carrying a balance. Despite this new reliance, 64% of respondents are somewhat or very impact concerned that rising interest rates will their debt.

Discretionary Purchases Are the First To Go

Unsurprisingly, as prices rise and budgets tighten, nonessential purchases are commonly engaging. The primary type of purchase that responds is cutting back on are discretionary items, including expenses related to entertainment or socializing. A full two thirds of vote selected that they are adjusting discretionary purchases in order to stay in budget, for example by reducing the number of items purchased or selecting cheaper options.

Leisure travel is also on the chopping block. Respondents are choosing to travel less often and in some cases have canceled or postponed existing plans. Downgrading plans to more affordable options was another popular choice for coping with current prices. Only 9% of respondents said that inflation has not their travel plans.

Also, more than half of responses noted that they are delaying making a major purchase. This number is even more significant when excluding respondents who don’t have major purchases planned: when adjusted, the proportion delaying major purchases jumps to 70%. Deferring these expenses may not be realistic forever. Schedule flexibility for household repairs or new vehicles may later become urgent needs and sources of financial pressure.

Essential Purchases Hit, Too

The cost of goods and services has risen enough that answer are modifying their spending behavior for essential items, too. In fact, 30% of respondents haven’t definitely changed the exact items they’re purchasing—but they are paying more for them. Another 54% of respondents have chosen to stay on budget even if that means selecting different versions of essential items or buying a smaller amount.

While credit cards are far from the only solution to rising costs, some respondents would consider opening a new card to ease some of their pressure. Factors in choosing a new card aren’t glamorous, either. Access to additional credit was a consideration for 22% of respondents, while 17% of respondents would like an intro APR offer to pay for purchases over time. Furthermore, 17% of selected respondents that they needed a welcome bonus to subsidize essential purchases.

Bottom Line

Although no one can predict the future, high prices are already putting pressure on most household budgets. This survey suggests that Americans have had to make changes to their spending habits on both discretionary and essential items and in some cases, are counting on credit cards and carrying a balance to cover costs of these already-modified purchases.

Methodology

This online survey of 2,000 US adults was commissioned by Forbes Advisor and conducted by market research company OnePoll, in accordance with the Market Research Society’s code of conduct. Data was collected on June 2-3, 2022. This survey was overseen by the OnePoll research team, which is a member of the MRS and has corporate membership with the American Association for Public Opinion Research (AAPOR). For a complete survey methodology, including geographic and demographic sample sizes, contact pr@forbesadvisor.com.

Find The Best Credit Cards For 2022

No single credit card is the best option for every family, every purchase or every budget. We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.

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