Most Consumers Without Credit Cards Still Use Credit

A new study reveals that 62 percent of U.S. consumers without traditional credit cards still use some form of credit. This includes store cards and buy now pay later (BNPL) services. The research suggests that these consumers are not avoiding credit, but instead seeking out more accessible and flexible alternatives.

The report, Decision Guide: What Credit Card Outsiders Want — and How FIs Can Bring Them Back, was developed by PYMNTS Intelligence in collaboration with Atelio by FIS. It surveyed 2,630 U.S. consumers in early 2024 to understand the habits, concerns, and preferences of those who do not currently hold traditional credit cards.

Who Are the Credit Card Outsiders?

The study identifies four distinct groups:

• Previously held credit cards and are open to using them again.
• Have never had a credit card but are interested in exploring credit options.
• Previously used credit cards but have chosen not to return to them.
• Have never held a credit card and currently have no interest in doing so

Despite their differences, many in these groups are already using credit in some form. Their behaviour suggests a strong demand for short-term, flexible solutions that do not come with the complexities of traditional credit cards.

The Opportunity for Financial Institutions

Sixty-two percent of credit card outsiders hold at least one credit product. Store cards and BNPL plans are the most common. This is not a rejection of credit itself, but of the format that traditional credit cards represent. Financial institutions have an opportunity to design tools that match how these consumers already spend and borrow.

Secured credit cards are one such option. They are the most appealing new credit product among this group, with 29 percent expressing interest. Traditional credit cards follow at 28 percent, and BNPL services at 27 percent.

The Barriers to Entry

The report also highlights key reasons why these consumers have not opted for secured credit cards. The most common is a lack of upfront funds, cited by one in three respondents. Others mention concerns about high interest rates, annual fees, and a lack of flexibility in spending.

These obstacles point to both financial and psychological barriers. Addressing them will require not only product design changes, but also improved communication around the long-term benefits of responsible credit use.

Moving Forward

Consumers without traditional credit cards are open to using credit when it fits their lifestyle. Financial institutions that can provide simple, transparent, and low-friction credit products will be better positioned to serve this untapped market.