Lower-Income Households Lean on Credit Cards

Households with lower incomes are cutting back and relying more on credit as inflation stays high and wage growth stalls.

Updated on Nov. 4, 2026 in Spending

Bold flat-color vector editorial illustration of a wire shopping basket with groceries beside a blank card and coins on a cream surface. — Households earning less are leaning on credit cards for basic costs as wage growth stalls and inflation stays high, while higher earners drive August retail spending. AI Illustration. Upload story photo >

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Higher-income Americans drove a jump in U.S. retail sales in August, even as lower-income households scaled back spending amid high inflation. Gas prices also rose, forcing drivers to spend more per gallon.

Why it matters

Wage growth has hit a wall despite elevated inflation, leaving lower-income households more reliant on credit cards to get by while affluent households use cards mainly for travel and entertainment. The split suggests that headline spending strength may mask real pressure on household budgets across the income range.

American Express reported third-quarter revenue of 20.1 billion U.S. dollars, up 9 percent from a year earlier, with card spending rising 8 percent to 454 billion dollars. American Airlines posted third-quarter revenue of 16.3 billion dollars, up 19.3 percent year-on-year.

The players

American Express

A card issuer whose consumer credit cards and rewards programs shape how households pay for travel, dining and everyday purchases.

American Airlines

A major U.S. airline whose fares and loyalty program directly affect what households pay for air travel.

Dollar General

A discount retailer whose low-price stores serve many lower-income households buying everyday necessities.

Dollar Tree

A discount retailer whose low-price stores serve many lower-income households buying everyday necessities.

The details

Affluent households are spending more on travel, airline tickets and restaurants, which lifted card-spending categories tied to discretionary purchases. Lower-income households, by contrast, are shopping at discount stores for daily necessities and leaning on credit cards to cover basic costs. Dollar General and Dollar Tree both beat quarterly sales expectations in August, a sign of that trade-down shopping pattern.

August: U.S. retail sales jumped, and Dollar General and Dollar Tree beat expectations.
Third quarter: American Express and American Airlines reported quarterly revenue gains.
October: The Conference Board's consumer confidence report showed a slight improvement as gas prices eased.

Money Landscape

The spending split between higher- and lower-income households comes as wage growth has stalled against elevated inflation. The Conference Board's consumer confidence report showed a slight October improvement, which followed easing gas prices of 25 to 50 cents a gallon.

Households at the lower end of the income range are leaning on discount stores and credit cards for necessities, so tracking how much of your budget goes to revolving balances is worthwhile. Gas prices that eased by 25 to 50 cents a gallon may give some drivers modest relief at the pump.

The takeaway

The spending gap between income groups is a useful signal for your own budget, so review where card balances and discretionary costs are growing. If credit use is rising, a conversation with a qualified financial professional can help you plan next steps.