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34% of Shoppers Choose Not to Spend When Credit is Denied

DATE POSTED:August 1, 2025

Consumer credit presents a challenge for financial institutions, as new research reveals revenue and customer relationships at stake when preferred payment methods become unavailable.

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The PYMNTS Intelligence report “What Consumers Do When Their Go-to Credit Choice Is Unavailable” examines how consumers manage expenses when their primary credit product is inaccessible. Based on a survey of 2,342 U.S. consumers from Feb. 11-18, the report analyzes behaviors when preferred credit options like cards or buy now, pay later (BNPL) are declined due to merchant non-acceptance or reaching credit limits.

The study finds that when unable to use their first-choice credit, consumers primarily pivot to a different credit product or forgo the purchase. For essential expenses, 37% would use another credit product, while 1 in 3 would skip the purchase. For nonessential expenses, skipping (34%) or delaying (33%) the transaction are most frequent, followed by using another credit product (32%).

These trends highlight persistent financial and credit access constraints across essential and nonessential spending. Beyond these primary findings, deeper insights from the report illuminate specific consumer segments and behaviors for financial services providers:

  • Dual Reliance on Informal Credit: Research shows borrowing from family or friends, often a “last resort,” is disproportionately chosen by individuals at both extremes of credit product engagement. Those with no active credit are most likely to use this option (39% for essentials, 34% for nonessentials). Consumers managing over five active credit products also show a high propensity for essential expenses (34%). These rates are roughly double those for shoppers with one to four active products, suggesting a lack of formal credit access or potential overextension leading to maxed-out accounts.
  • Unmet Demand for Essential Credit: Many consumers would still skip or delay essential purchases if primary credit were unavailable. This action highlights the unmet demand for accessible credit. This finding is vital for institutions bolstering financial resilience, indicating existing credit offerings may not adequately serve consumers for unexpected spending.
  • Credit Limits Undermine Familiarity: For consumers prioritizing familiarity in payment choice, their preferred cards’ reliability often diminishes with essential expenses. While they might use a different credit product for nonessential purchases (27%), they are more likely to borrow from family or friends for essential items (14% versus 3.3% for nonessentials). This suggests familiar card comfort is insufficient against tight credit limits, pushing consumers to informal solutions for crucial needs. This highlights a gap where existing credit products fail to meet unexpected, vital spending requirements.

The report further examines the influence of rewards on consumer backup plans and behavioral differences among young or low-income demographics when credit is unavailable. Understanding these detailed responses is important for banks and FinTechs seeking to optimize product offerings and enhance customer loyalty in the evolving digital economy.

The post 34% of Shoppers Choose Not to Spend When Credit is Denied appeared first on PYMNTS.com.