With the nation's unemployment at 7.7 percent and the economy sputtering, there is growing concern that Americans are turning to their credit cards to pay for essentials, including their groceries.
Consumer advocates express alarm over an explosion of credit-card charges at supermarkets. The number of grocery stores accepting Visa and MasterCard jumped more than sixfold, to 5,000, in the past year, and total purchases are increasing more than 50 percent a year.
"I think it's totally inappropriate to use credit cards for food purchases," said Ken McEldowney, director of Consumer Action in San Francisco. "When the financially strapped start to use credit cards for essentials, it's a sign that they are about to go further into debt."
Frances Smith, vice president of the Consumer Credit Education Foundation, an organization founded by a consumer finance trade group, agreed. She said that many consumers end up paying more for food when they use charge cards.
"It's never a good idea to use credit to purchase essentials," she said.
But grocers and credit-card issuers say that allowing purchases to be charged at supermarkets offers consumers convenience, just like the time-saving service provided at other types of stores. They also say there is little evidence that card use at supermarkets has contributed much to a recent rise in credit-card debt.
"It's time-saving and convenient to pay with a Visa card," said Armen Khachadourian, vice president of supermarket-merchant relations at Visa USA. "People use credit cards at delicatessens and flower shops all the time. I don't see the difference between ordering flowers with a card and using a card to buy at supermarkets."
Visa USA, America's largest credit-card company, said card purchases at supermarkets totaled $981 million in the 12-month period that ended April 1, above the $600 million for the previous 12 months. Consumers used MasterCard to ring up $550 million in sales in the first six months of 1992, against $190 million in the same period last year.
The trend is reflected in the food-retailing industry. Only 800 supermarkets accepted credit cards issued by MasterCard and Visa for checkout purchases before April 1991. Today, more than 5,000 supermarkets accept the cards. The number of grocery stores accepting Discover, the credit card issued by Sears, Roebuck and Co., has increased 75 percent in the last year.
Visa contends that most of its card users do not dig a credit hole by charging their food purchases. Visa officials say that although 43 percent of their cardholders avoid revolving credit charges by paying their balances monthly, 56 percent do so for food purchases. Mr. McEldowney of Consumer Action in San Francisco scoffs at those claims. "It's almost immoral for supermarkets to accept credit," he said. "The growth in credit-card use at markets is a sign of recession and a result of card issuers and banks encouraging such use."