35% of Subprime Consumers Remain Outside the Card Market

More than 1 in 3 subprime consumers sit outside the card market, leaving lenders and merchants with room to build a more manageable entry point to credit.

The PYMNTS Intelligence report “Who Is the Subprime Consumer? A Behavioral Profile,” released in May, found that subprime consumers aren’t a small or temporary fringe. They represented 17% of consumers in the United States in January, and their share has remained within a 14% to 23% range across 47 monthly surveys.

Many subprime consumers aren’t leaning heavily on cards because they don’t have one. In February, 35% held neither a credit card nor a store card, compared with 12% of prime consumers and 4% of super-prime consumers.

Three findings showed where the opening lies:

The gap is broad. The subprime no-card rate was nearly nine times the super-prime rate and almost three times the prime rate. That leaves a sizable group beyond the reach of conventional card rewards, credit-building features and emergency spending capacity.

Store cards haven’t filled it. Just 3% of subprime consumers held only a store card. Another 25% held both a store card and a general-purpose credit card, less than half the 54% share among super-prime consumers. Retail credit reaches some of this market, but the figures suggested it has room to reach more.

Product design could provide a bridge. The report identified low-friction approval, a small starting line, billing aligned with cash flow, and a clear route to a general-purpose card as possible features for serving this group. Such a product could work like a learner’s permit, giving consumers a controlled way to establish a payment record before moving to a larger credit line.

The opportunity comes with limits. The report found that 55% of subprime consumers live paycheck to paycheck and struggle to pay bills, while their average non-liquid savings stood at $3,138 in January. Still, behavior is changing. The share that always or usually carries a card balance fell from about half in mid-2023 to 38% in January. Subprime consumers also used buy now, pay later at a higher rate than the full sample, although their use clustered among certain providers.

Other findings showed young subprime consumers delaying healthcare and many households using tax refunds as working capital. Together, the data pointed to a stable customer group that could respond to transparent pricing, modest limits and payment schedules built around actual cash flow.

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