NEW YORK--For decades, conventional wisdom held that consumers with subprime credit relied heavily on revolving credit card balances to make ends meet. But new research from PYMNTS Intelligence suggests that assumption is rapidly becoming outdated, as millions of financially stressed Americans assemble a patchwork of alternative payment options that better match the realities of unpredictable cash flow.
According to the latest PYMNTS Intelligence report, Who Is the Subprime Consumer? A Behavioral Profile, approximately 44 million Americans with subprime credit scores are no longer simply navigating temporary financial setbacks. Instead, they represent a permanent and increasingly distinct segment of the U.S. economy whose payment habits are reshaping consumer finance. Rather than depending primarily on traditional credit cards, many now rely on a combination of buy now, pay later (BNPL) financing, store-branded credit, healthcare payment plans and even loans from family and friends to bridge everyday expenses.
The findings point to what PYMNTS Intelligence describes as a fundamental shift in how financially vulnerable households manage money. Instead of borrowing based on available credit limits, many consumers are organizing their finances around cash flow—using whatever payment tools provide the greatest flexibility at the moment they need them.
Maybe the clearest sign of that transformation is the declining role of revolving credit. PYMNTS Intelligence found that 35% of subprime consumers report having no traditional credit card or store card at all, compared with just 4% of consumers with super-prime credit. Even among those who do have cards, reliance on revolving balances is falling sharply. The share of subprime consumers who reported always or usually carrying balances dropped from about half in mid-2023 to just 38% by January 2026, suggesting installment products and alternative financing options are steadily replacing conventional credit card borrowing.
That migration is occurring alongside explosive growth in buy now, pay later products, although PYMNTS Intelligence found that not all providers attract the same consumers. Services such as Klarna, Sezzle, Quadpay/Zip, FuturePay and Acima show disproportionately strong adoption among subprime borrowers. By contrast, PayPal Pay in 4 and travel-focused lender Uplift attract relatively fewer consumers with lower credit scores. The report suggests providers serving more subprime borrowers generally rely on thinner-file underwriting, merchant-driven approvals and smaller financing amounts, making them more accessible to consumers who may not qualify for traditional revolving credit.
Healthcare A Driver
Healthcare has emerged as another major driver of changing payment behavior. PYMNTS Intelligence found that financial pressures are increasingly forcing younger adults with subprime credit to postpone or modify medical care. Among consumers ages 18 to 43, nearly one-quarter delayed seeing a doctor because of cost, while 14% failed to fill prescriptions and 11% reported rationing medication or reducing dosages to save money. To cover medical expenses, more than one-quarter turned to BNPL or installment financing, while 38% borrowed money from relatives or friends.
Those behaviors, PYMNTS Intelligence argues, reflect deeper structural cash-flow challenges rather than isolated financial emergencies. Instead of facing occasional setbacks, many households are continually juggling limited liquidity while attempting to meet recurring expenses.
The report finds similar patterns in how subprime consumers use annual tax refunds. For many households, refunds function less as a savings opportunity than as an essential source of operating cash. Nearly seven in 10 subprime tax filers—67%—said their refund was either critical or very important to their financial well-being. More than one-third directed the largest portion of their most recent refund toward routine bills and everyday living expenses, while only 14% primarily used the money for savings or investments.
Taken together, the findings suggest that liquidity timing—not borrowing capacity—is becoming the defining feature of financial management for millions of Americans. Rather than maximizing available credit lines, consumers increasingly seek payment options that allow them to better synchronize expenses with income, regardless of whether those solutions come from banks, fintechs, healthcare providers or personal networks.
For financial institutions, including credit unions, the implications extend well beyond credit underwriting. PYMNTS Intelligence suggests traditional revolving credit products may no longer represent the primary opportunity within the subprime market. Instead, lenders may find greater success offering financing solutions designed around flexible repayment schedules, smaller approval amounts, embedded payment options at the point of sale and products that accommodate uneven household cash flow.
That evolution also challenges long-standing assumptions about consumer risk. Historically, lenders have viewed subprime borrowers primarily through the lens of credit scores and default probabilities. But PYMNTS Intelligence argues that perspective overlooks a large, stable population whose payment behaviors are adapting to changing economic realities rather than simply reflecting poor credit management.
As installment lending, BNPL and alternative financing continue expanding across retail, healthcare and everyday commerce, the report suggests the future of consumer finance may be shaped less by traditional credit card economics and more by products designed to provide flexibility during periods of persistent financial strain.