New Data: Got Credit? Consumers Do and They Want More

• Overall, 53% of U.S. consumers have interest in receiving a new credit product in the next year, with income not a meaningful differentiator.
• PYMNTS Intelligence data found several key factors that do impact consumers' credit appetite, however, including trends with credit balances and the number of accounts held.
• A deep analysis of credit user profiles reveals opportunities banks and other lenders are missing.

Consumers love credit — and more than half are interested in obtaining a new credit product in the next year. PYMNTS Intelligence’s latest research reveals that income level has relatively little impact on this demand. Robust interest in new credit products holds for consumers earning less than $50,000 annually and those earning more than $100,000.

Living paycheck to paycheck or facing unstable cash flows, however, stand out as primary drivers. For example, about 6 in 10 consumers living paycheck to paycheck are interested in obtaining a new credit product. This is almost double the rate seen among those who do not live paycheck to paycheck. Consumers with more credit accounts currently are more likely to want additional ones. Individuals who tend to revolve their credit card balances are also seeking more credit.

These are just some of the findings detailed in “Consumer Credit Economy Monitor: Who Wants More Credit?,” a PYMNTS Intelligence special report. This edition examines consumer demand for credit products. It draws on insights from a survey of 2,206 U.S. consumers conducted from May 1 to May 17.

• More Credit, Please
• Key Findings
• Conclusion
• Methodology

More Credit, Please

More than half of consumers are interested in obtaining a new credit product in the next year.

U.S. consumers are hungry for additional credit: 53% are interested in obtaining a new credit product in the next year. This enthusiasm differs little across income brackets, reflecting robust overall demand. Consumers earning $50,000 to $100,000 per year show the highest interest, at 56%.

Living paycheck to paycheck, having lower credit scores and facing unstable cash flows all drive higher demand for additional credit. Sixty-one percent of consumers who live paycheck to paycheck without issues paying bills and 66% of those struggling to pay their bills indicate interest in new credit products. In contrast, just 34% of individuals not living paycheck to paycheck say the same. A similar pattern occurs among consumers with subprime (68%), prime (64%) and super-prime (43%) credit scores.

A consumer’s cash flow situation emerges as the strongest predictor of interest in new credit accounts. Most individuals facing unstable cash flows (80%) and occasional cash crunches (66%) show interest in additional credit. In contrast, just 33% of those with stable cash flows do the same.

Cash flow stress serves as a strong predictor of the number of new credit products that consumers want. On average, respondents who indicate interest in new credit would like to have 1.9 more credit accounts. Among those with unstable cash flows, this jumps to 2.4 — a 26% increase. Conversely, income levels have little predictive power. Individuals across income brackets indicate interest in 1.9 or 2.0 new products, on average. The data thus suggests banks and other credit providers need to look beyond income to understand and predict consumers’ appetites for credit.

Key Findings

Consumers who have more credit products currently are more likely to want additional ones.

Another key indicator of consumers’ demand for new credit is the number of existing credit accounts they have. On average, respondents who want new credit products hold 33% more accounts currently than those not interested in additional credit. This offers lenders a simple but powerful insight: Consumers with more credit products tend to also want more. Unlike a consumer’s self-reported paycheck-to-paycheck or cash flow status, the number of their open credit accounts can be readily observed from credit reporting and history with providers.

The types of credit accounts consumers hold provide further insights into their appetites for new credit. For some of the most common products — credit cards, mortgages, auto loans, store cards, and home equity loans — interest in new credit products varies little regardless of current uptake. For example, 66% of consumers interested in new credit have a credit card, as do 70% who show no interest.

However, several credit products are much more likely to be held by consumers who want new credit. For instance, 21% of consumers interested in additional credit accounts have a personal loan. This compares to just 8.9% of individuals not interested in more credit products — a rate 2.3 times greater. Consumers who have buy now, pay later (BNPL) plans follow a similar pattern. Consumers interested in additional credit products are 2.6 times more likely to have a BNPL account than those not interested. As with the number of open credit accounts, the type of products that an individual holds is something that lenders can determine from credit reporting and other available data.

Consumers with higher credit card balances are more likely to want additional credit products.

Credit card balances are another key predictor of interest in new credit. Those interested in additional credit products carry average monthly balances of about $2,800 across credit and store cards. This is 29% higher than the average of about $2,200 among those not interested in new credit products.

Given the trends established above, it may be little surprise that consumers who revolve their card balances are more likely to want new credit. In fact, 60% of individuals who would like additional credit revolve their card balances. Conversely, just 37% of those not interested in new credit products currently do so.

Paycheck-to-paycheck status and credit score are the strongest indicators that consumers are on the “credit treadmill.”

This study identifies three distinct credit user personas based on how individuals manage their credit and store card balances. Reward seekers avoid revolving balances. They use credit cards because they like the rewards and convenience, not to make up for a lack of cash. Credit cushion users make purchases by card that they plan to pay later or gradually, cushioning a lack of cash. Credit treadmill users are working to stay afloat by paying the monthly, but sometimes underpay or miss payments. They primarily want additional credit to find more breathing room.

These persona groups reveal two noteworthy trends that build on the themes identified above. First, while nearly half of consumers earning more than $100,000 per year are reward seekers, the share of credit treadmill users varies little across income brackets. This reinforces PYMNTS Intelligence’s consistent findings that many high-income consumers live paycheck to paycheck. Second, the same primary drivers of demand for new credit — paycheck-to-paycheck status, credit scores and cash flow instability — also strongly influence credit persona. For example, just 10% of consumers with subprime credit scores are reward seekers, less than one-third of the sample-wide rate, while 23% are credit treadmill users, about double the sample average.

Consumers on the credit treadmill have the greatest interest in obtaining new credit products, especially personal and debt consolidation loans.

A consumer’s credit use persona strongly indicates whether they will want additional credit and which product type they want. Two-thirds of credit treadmill users show interest in obtaining additional credit products, followed by 63% of credit cushion users. Both groups revolve credit card balances and face gaps in cashflows. For reward seekers, the share interested in new credit accounts drops to 41% — markedly lower than the 54% of consumers currently without a credit or store card. This suggests banks and other lenders are missing an opportunity to develop new credit products that appeal to reward seekers, who generally have strong credit scores and financial flexibility but may feel they have enough accounts already.

The data provides insights into which credit product categories consumers want most. Credit cards enjoy the highest overall interest with little variation across credit user personas. For other categories, however, credit personas play a bigger role. Credit treadmill users (23%) are more interested in personal loans than credit cushion users (18%) or reward seekers (9.8%). Interest in debt consolidation follows a similar pattern, but the gap in interest is much wider. Credit treadmill users are 61% more interested in debt consolidation loans than cash cushion users. Compared to reward seekers, however, credit treadmill users are 513% more interested in debt consolidation loans.

Conclusion

U.S. consumers demonstrate robust demand for new credit products, with similar levels of interest across low- and high-income brackets. Individuals who currently have more credit products tend to have stronger appetites for additional ones, indicating that existing familiarity and comfort with credit help drive applications for new accounts. That said, a lack of cash flow stability and living paycheck to paycheck are also strong predictors of wanting new credit. This highlights the extent to which tight financial situations fuel the use of credit for many consumers. Moreover, a sizeable share of credit cardholders are stuck on the credit treadmill. This is something that lenders should understand and approach strategically.

At the other end of the spectrum, reward seekers tend to have financial flexibility and high credit scores but exhibit much less interest in new credit products. Lenders that capture the attention of this group with reward-focused products stand to expand their market shares.

Methodology

“Consumer Credit Economy Monitor: Who Wants More Credit?,” a PYMNTS Intelligence exclusive report, is based on a survey of 2,206 U.S. consumers conducted from May 1 to May 17. The report takes a deep dive into the demand for new credit products and the role of consumers’ financial situations. Our sample was census-balanced to match the U.S. population, with 51% of respondents identifying as female and 38% annually earning more than $100,000. The average respondent’s age was 48.

For more, read the May 2024 report, “Consumer Credit Economy Monitor: Summer Travel 2024.”