The news: A growing share of consumers were already feeling stretched and turning to credit to make ends meet before the war in Iran drove up the cost of everything from gasoline and fertilizer to lettuce and lemons.

• Household debt rose 4.1% YoY last year to a record $18.78 trillion, with credit card balances increasing even faster at 5.8%, per a Federal Reserve Bank of New York report.
• Many turned to buy now, pay later (BNPL) to buy groceries and other everyday items, with a majority (54%) of users saying they wouldn’t have been able to make ends meet without installment loans, per a Lending Tree survey.
• The situation led 46% of respondents to the University of Michigan’s consumer sentiment survey in February to spontaneously mention high prices eroding their personal finances.

Why it matters: The conditions have gotten worse since the war began.

• The national average price of gas has climbed to $4.52, up nearly $1.54 since the last week of February, per AAA.
• Inflation has picked up, with the Consumer Price Index rising 3.8% YoY in April, the fastest rate in three years. Grocery prices rose 2.9%, electricity costs increased 6.1%, and gasoline prices jumped 28.4%, per the US Bureau of Labor Statistics.

Those rising costs are eating into consumers’ budgets, as the average household spent around 3.1% of their income on gasoline in March, up from 2.8% a year earlier, per the Bank of America Institute.

The situation is even more pronounced among low-income consumers, as the median lower-income household spent 4.2% of their income on gasoline, up from 3.9% a year earlier.

Zoom out: In spite of those stressors, consumers are demonstrating financial resilience. Delinquency rates across major issuers were trending in a positive direction; however, these institutions largely serve consumers with high FICO scores who are more likely to be insulated from economic shocks.

For fintechs serving more fragile consumers, small-dollar lending products drove loyalty: Cash App’s consumer lending originations surged 82% YoY, and Cash App Borrow’s origination rose 175% YoY, per Q1 2026 earnings.