Cover the Cost, Carry the Debt: How Consumers Handle Financial Shocks

What causes consumers’ financial shocks?

Most consumers faced at least one shock last year: According to a December 2025 Paycheck-to-Paycheck survey, 53% paid for an unexpected expense of $400 or more in the past 12 months. These costs often stem from unexpected repairs or maintenance on essentials that consumers rely on. Among consumers who faced a shock, 48% reported an expense related to car or transportation repairs, and 37% had unexpected home repair or maintenance costs. The third-most common type of shock was medical or dental bills (33%).

Moreover, it’s usually not just one thing. Consumers who faced any shock usually had multiple such unexpected expenses. Those who experienced at least one financial shock averaged 3.2 such expenses, and nearly four in 10 (39%) had three or more.

Who can absorb these shocks, and who can’t?

The cost of these shocks often exceeds the amount consumers have set aside to prepare for them. Among consumers who faced unexpected expenses of $400 or more, the estimated median cost of their largest expense was roughly $1,850. Nearly one in five (19%) of these expenses cost $5,000 or more. Many consumers don’t have the financial cushion to pay for those shocks. Across all consumers, 35% have less than $1,000 in readily available savings, and 15% have none.

Financial lifestyle and credit tier can predict whether these unexpected costs set consumers back.

Consumers facing the most financial instability are the least able to absorb these shocks. Overall, 18% of consumers who faced an unexpected expense of $400 or more said they fell behind on bills after the largest financial shock. That figure more than doubles to 40% among those who live paycheck to paycheck and struggle to pay their bills. Meanwhile, only 4% of those not living paycheck to paycheck fell behind.

Credit scores are also linked to how well consumers can cope with shocks. Subprime consumers (those self-reporting a credit score of less than 620) and super-prime consumers (those self-reporting a score of 720 or higher) were about equally likely to face an unexpected expense of $400 or more, at 54% and 57%, respectively. Yet among those who experienced such a shock, 45% of subprime consumers fell behind on bills afterward, compared with 7% of super-prime consumers.

Subprime consumers were also more than three times as likely to say they were still struggling to recover (42% versus 13% of super-prime consumers). These shocks could be making it even harder for this group to improve their credit scores.

Subprime consumers also reported less predictable incomes. In the December 2025 Paycheck-to-Paycheck survey, 29% of subprime consumers with personal income said it was rarely or never predictable. Only 7% of super-prime consumers said the same.

How hard do these shocks hit?

One in four consumers who faced an unexpected shock hasn’t yet bounced back. PYMNTS Intelligence sorted shocks into different tiers based on how far consumers have recovered from their largest unexpected expense. If a shock was a nuisance, that means the consumer made a full recovery. If a shock was a short-term hit, that means the consumer made a partial recovery. If a shock had long-term effects, that means the consumer is still struggling or is permanently worse off.

Among consumers who experienced an unexpected expense of $400 or more, 43% experienced a nuisance and 32% a short-term hit. The remaining 25% faced long-term effects, with 22% still struggling and 3% permanently worse off. Consumers who live paycheck to paycheck and struggle to pay bills were the least likely to have recovered. Among this group, only 22% have fully recovered, while 53% are still struggling or permanently worse off.

Consumers with lower incomes also tend to recover more slowly. Notably, consumers earning less than $50,000 a year were less likely than those earning $150,000 or more to report an unexpected expense of $400 or more (40% versus 59%). Still, among consumers who did face an unexpected expense, those earning less than $50,000 were 2.4 times as likely as those earning $150,000 or more to fall behind on bills.

How do consumers cope with these financial shocks?

Some ways consumers deal with these unexpected bills have a temporary impact on their lives, such as using credit more than usual (21%) or cutting back on groceries (21%). Others have longer-term consequences. Twenty-two percent reduced savings or retirement contributions, 18% fell behind on bills and 9% canceled or postponed medical care. These results could suggest that relying on credit can turn a short-term hit into a long-term financial burden when balances aren’t paid off.

Most consumers pay for shocks right away, while those who struggle often turn to costlier options. Among consumers with an unexpected expense of $400 or more, paying immediately was the most common approach. Forty-three percent used checking, savings or cash for the largest expense, and 27% put it on a credit card and paid the card in full.

Twenty-four percent carried a credit card balance, and 10% used an installment plan or buy now, pay later (BNPL). At the costlier end of this spectrum, 7% used a payday loan, deposit advance or overdraft.

Subprime consumers were more likely to turn to more expensive options. Fifteen percent of subprime consumers who faced a shock used a payday loan, deposit advance or overdraft, compared with 5% of super-prime consumers—2.8 times as often. By financial lifestyle, 14% of those living paycheck to paycheck and struggling to pay bills used one of these options, compared with 4% of those not living paycheck to paycheck.

Payday loans hold the highest cost among these options. According to a March 2026 PYMNTS Consumer Expectations Index (PCEI) survey, 8% of consumers who were short on money in the previous 90 days turned to payday loans, while twice that share had overdrawn their accounts. 

Even paying for an unexpected financial shock doesn’t always end the problem. The March 2026 data found that 49% of consumers who ran short on money and used some method to cover the difference said it worked but made their next paycheck or bills harder to manage. Only 39% said it solved the problem without creating a new one. In a December 2025 PCEI survey, 34% of all consumers said they paid fees or interest at least once a month for not having enough funds.

While some fixes may help keep a short-term hit from becoming a permanent issue, others lead to more problems down the line. A consumer’s financial lifestyle is a much clearer indicator of risk than whether they experienced a shock at all.

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Methodology

“Cover the Cost, Carry the Debt: How Consumers Handle Financial Shocks” is a PYMNTS Intelligence exclusive report that draws on data from several PYMNTS Intelligence surveys of U.S. consumers. Most findings come from the December 2025 survey of 2,465 U.S. consumers conducted for The Paycheck-to-Paycheck Report series. Card balance data comes from a September 2026 survey of 2,487 U.S. consumers, also conducted for The Paycheck-to-Paycheck Report series. The PYMNTS Consumer Expectations Index (PCEI) data comes from surveys of 2,267 adult U.S. consumers in December 2025 and 2,126 in March 2026. Late fee data comes from a July 2026 survey of 2,732 consumers conducted for The Pay Later Ecosystem series.