Many Americans are finding themselves in deeper debt, attributing it to various factors like impulse buys, emergencies, and historically high credit card interest rates. However, a growing number are citing a more fundamental issue: the rising costs of daily living.
A study by Accredited Debt Relief, titled “Debt by Generation in 2026: How Borrowers of Different Ages Are Coping,” reveals that 78% of those surveyed believe inflation is the primary driver of their increased debt, and this sentiment resonates across all generations, from Gen Z to Baby Boomers.
It’s essential to note that while these opinions highlight a trend, they don’t establish a direct link between inflation and individual household debt levels. Factors like personal spending habits, unexpected medical bills, job losses, and other unforeseen expenses can also lead to debt. Still, government statistics and consumer surveys suggest that climbing prices significantly affect household finances, particularly for those already facing economic challenges.
Pressure from Rising Prices on Households
Though inflation eased notably from its pandemic peaks by 2024, it has been on the rise again, particularly from 2025 into 2026. The Consumer Price Index saw a 3.4% increase in the 12 months leading to August 2026, with food prices up 2.7% and housing costs rising 3.0%, according to the Bureau of Labor Statistics.
Meanwhile, wages are lagging behind these increasing costs. The BLS reports a 0.3% decline in real average hourly earnings when adjusted for inflation from August 2025 to August 2026, although real average weekly earnings did see a slight increase of 0.3% due to longer workweeks.
A 2025 survey conducted by the Federal Reserve found that 58% of adults felt that rising prices had worsened their financial situations, making inflation the most significant financial stressor reported.
Another survey from U.S. News & World Report found that 57% of 1,200 respondents claimed that inflation and rising prices forced them to lean more on credit cards. About 57% reported that they currently carry a credit card balance.
Carrying debt doesn’t necessarily mean every grocery purchase charged to a card contributes to that debt. If someone pays off their credit card bill in full, they’re not carrying any debt forward. But when necessary expenses repeatedly exceed income, reliance on credit can convert temporary financial gaps into longer-lasting debt that accrues interest.
Different generations face various additional pressures. In the Accredited Debt Relief study, Millennials reported that low wages and job instability were significant factors in their debt, whereas Gen Z mentioned a lack of financial knowledge and shifts in government policies as contributors. This viewpoint may reflect changes in federal student loan regulations.
If you find yourself facing rising debt, the first step is to identify the root cause of your financial shortfall.
A household that consistently spends $300 more than it earns has a separate issue compared to someone who ends up with credit card debt after an unexpected car repair or emergency room visit.
The Consumer Financial Protection Bureau advises tracking your income and expenses if you’re struggling to pay your credit card bills. If it turns out that necessary expenses consistently outstrip income, cutting back on non-essential spending may help, though it might not entirely bridge the gap.
If you’re worried about making credit card payments, it’s essential to reach out to your card issuers instead of simply missing payments. Many companies may be willing to adjust payment arrangements in the event of financial emergencies. It’s advisable to be prepared to explain your situation, including how much you can afford and when you expect to return to normal payment levels. Ultimately, credit card companies prefer receiving payments over pursuing legal action.
Nonprofit credit counseling services are another route. Counselors can assist borrowers in creating budgets or, when suitable, setting up debt management plans with relevant creditors. Always check for fees and services before signing up, and be wary of debt settlement companies that promise quick fixes or advise customers to stop communicating with creditors.
Debt consolidation might help lower interest rates or simplify payment management, but it doesn’t rectify an ongoing financial shortfall by itself. If spending exceeds income, simply consolidating debt likely won’t resolve the underlying issue.
This underscores the importance of identifying the source of the debt before selecting repayment strategies. Different types of debt, whether from inflation-driven costs, unexpected emergencies, or discretionary spending, may require distinct approaches.
Decisions around spending still hold significant weight, and unexpected expenses like medical bills or crucial repairs can’t be ignored. Yet for those whose earnings fail to cover regular necessities, merely cutting back on eating out or canceling subscriptions usually won’t suffice. It’s more about redefining the monthly budget through reduced costs, increased income, a manageable repayment plan, or a combination of these strategies.
