What Consumers Do When Their Go-To Credit Choice Is Unavailable

Not every credit purchase goes smoothly. Whether they’re using a credit card, buy now, pay later (BNPL) or another credit option, sometimes a consumer can’t pay with their first choice. Perhaps the merchant doesn’t accept it. Or maybe a shopper has hit their credit limit or run into another snag. Many shoppers in this situation might use another form of credit — but even more will likely delay or skip their purchase.

PYMNTS Intelligence’s latest research focuses on what consumers do when they decide to buy something with credit but can’t use their first choice of payment. For example, shoppers who wanted to pay with mainstream options such as credit cards or BNPL are much less likely to borrow from family or friends compared to those who planned to pay with alternative options such as personal or payday loans. Meanwhile, those who prioritize the rewards available from their preferred payment method are the most likely to use another credit option to complete their purchase rather than forgo buying altogether.

These are just some of the findings detailed in “What Consumers Do When Their Go-to Credit Choice Is Unavailable,” a PYMNTS Intelligence special report. This edition examines how consumers manage expenses when they can’t use their primary credit product. It draws on insights from a survey of 2,342 consumers conducted from Feb. 11 to Feb. 18.

• What’s the Alternative?
• Turning to Family and Friends
• Rewards and Familiarity
• Read More
• Methodology

What’s the Alternative?

Consumers are most likely to use other credit products or skip their purchase altogether when they can’t use their preferred form of credit.

Among consumers who recently made an essential purchase using credit, 76% used credit cards, 6.1% used BNPL or other installment plans, and 18% used some other form of credit.¹ For nonessential purchases, the totals are similar, with 73% using credit cards, 10% using BNPL or installment plans and 18% using another type of credit.

We then asked these consumers what they would do if their first choice of credit payment method were unavailable. For essential expenses, shoppers most frequently say they would likely use a different credit product, at 37%. One in three said they would skip the purchase. Many consumers would buy something cheaper or delay the current purchase.

Turning to nonessential expenses, shoppers most often say they would likely skip or delay the purchase, at 34% and 33%, respectively. Using another credit product follows closely, at 32%. Other common alternatives for optional purchases include pivoting to something cheaper and delaying another expense instead of the current one.

Overall, the data varies little between essential and nonessential expenses. This highlights that consumers face the same basic financial and credit access constraints for both categories. The primary difference is that shoppers are less likely to skip or delay necessary expenses when forced into a Plan B scenario. That said, the fact that so many consumers would do so reflects the unmet demand for credit in times of need.

Turning to Family and Friends

Consumers who want to pay with alternative forms of credit, avoid credit or have many active credit products are especially likely to seek help from family or friends.

Borrowing money from family or friends can be a last resort, but some groups are particularly likely to do so. For example, the younger the consumer is, the more they name this as a backup option when they cannot access credit. One-third of Generation Z respondents say they would likely do so, followed by 29% of millennials. Lower-income consumers and those facing persistent cash crunches are also particularly likely to do so.

More interestingly, consumers on both ends of the credit use spectrum show high tendencies to borrow from family or friends. Those with no current active credit products are the most likely to name this as an option, at 39% for essentials and 34% for nonessentials. Meanwhile, those with more than five active credit products are also very likely, particularly for essential purchases, at 34%. These are roughly twice the rates seen among shoppers with one to four active credit products.

Shifting the focus to what consumers say is their single most likely backup plan reveals another valuable insight. Respondents who already planned to pay with an alternative source of credit — meaning anything other than a credit card, BNPL or installment plan — are much more likely than others to borrow from family or friends when that option is unavailable. Among these individuals, 15% say this borrowing would be their top alternative for essential expenses and 16% for nonessentials. These are more than twice the rates among consumers initially planning to pay with mainstream options.

Rewards and Familiarity

Consumers who prioritize earning rewards are the most likely to use a different form of credit as their backup plan.

When shoppers cannot use their selected credit product, their backup plan depends on what they value most in their initial payment method choice. Consumers who name better rewards as the top factor behind their original choice would most likely use another credit option. Meanwhile, respondents who initially selected the quickest or only way to access money would mostly skip the purchase.

Consumers who say familiarity drove their initial credit payment preference show the most dynamic behavior between essential and nonessential purchases. When the expense is nonessential, they are most likely to use a different credit product, at 27%. This share falls to 20% for essential purchases, behind choosing a cheaper alternative, at 23%.

At the same time, the share of those who would most likely borrow from family or friends is far higher for essential expenses, at 14%, than for nonessential expenses, at just 3.3%. This suggests that the familiarity of a favorite card only goes so far in times of need. For many consumers, tight credit limits can prevent their go-to card from having sufficient spending ability to cover the unexpected.

Read More

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Methodology

“What Consumers Do When Their Go-To Credit Choice Is Unavailable” is based on a survey of 2,342 consumers conducted from Feb. 11 to Feb. 18. This report examines how consumers manage expenses when their primary credit product is unavailable. Our sample was census-balanced to match the U.S. population, with 51% of respondents identifying as female. The average respondent’s age was 48, and 40% annually earn more than $100,000.

^{1. “Other credit products,” or alternative sources of credit, include personal loans, student loans, auto loans, payday loans, home equity loans, rent-to-own agreements, pawnshop loans, debt consolidation loans, credit-builder loans, overdraft coverage and any other credit product. They do not include the core credit group of credit cards, store cards, buy now, pay later and installment plans offered by the merchant or a third party.↩}