Roughly one-third of active credit users — about 55 million U.S. consumers — fit lenders’ profile of the ideal customer: individuals who revolve balances and pay more than the minimum each month. These “cash cushion users” are low-risk, high-return customers. They represent a middle ground between reward seekers who do not revolve balances and riskier consumers stuck on the credit treadmill.
Half of cash cushion users earn more than $100,000, and 86% of them have prime or super-prime credit scores. These facts point to their financial stability. Although they mainly use credit or store cards, they are twice as likely as reward seekers to use alternative lending. Cash cushion users are also more likely than other consumers to use credit for “upsell” purchases.
These are just some of the findings detailed in “Consumer Credit Economy Report: Lenders’ Ideal Customers,” a PYMNTS Intelligence special report. This edition examines consumer credit use patterns, with a focus on cash cushion users. It draws on insights from a survey of 2,016 U.S. consumers conducted from June 3 to June 14.
The Ideal Credit Customers
Cash cushion users represent 31% of consumers with credit or store cards. They use credit frequently and carry balances month to month but reliably make payments of more than the minimum due. Cash cushion users borrow for financial flexibility, representing a middle ground between reward seekers who pay their full balances and consumers on the credit treadmill. In many ways, cash cushion users make ideal customers for lenders. They revolve balances, which means they pay interest, but they remain low risk.
Credit User Personas
Reward Seeker: These consumers pay their complete credit and store card balances every month.
Cash Cushion: These consumers pay more than the minimum but less than the full balance on their credit and store cards.
Credit Treadmill: These consumers make the minimum payment or less on their credit and store cards.
The typical cash cushion user has strong credit and earns an above-average income. Nearly half of cash cushion users have super-prime credit scores, emphasizing their reliability. Meanwhile, just 14% of them have sub-prime scores. In addition, half of cash cushion users earn more than $100,000 per year and another 27% between $50,000 and $100,000. Although 7 in 10 cash cushion users live paycheck to paycheck, just 29% have trouble making ends meet.
Key Findings
Using credit for essentials and the nice-to-haves
Most consumers who regularly pay with credit do so for both discretionary and non-discretionary purchases. Among those who made any credit purchase in the last 90 days, 90% used credit for a discretionary expense, and 85% did so for a non-discretionary one. Across the credit use personas, these shares vary relatively little. However, cash cushion users are slightly less likely, at 73%, to have made both types of purchases. Credit treadmill and reward seeker users meanwhile come in at 76%.
Overall, consumers with credit or store cards are more likely to make purchases with their cards than using other types of credit. However, the data reveals important differences across the persona groups. Reward seekers are the most likely to pay by card, and credit treadmill users the least likely. Cash cushion users fall in the middle, with 72% using their cards for their latest discretionary credit purchase and 75% for their latest non-discretionary expense. About 1 in 5 use alternative sources, such as personal loans or merchant-provided installment plans. This means they use alternative sources at about twice the rate that reward seekers do.
Using credit for meals and home-related expenses
Groceries and restaurant meals represent the most common credit purchases for consumers with credit or store cards. Fifty-seven percent used credit for groceries in the last 90 days, while 47% did so for food from restaurants. These categories represent the most frequent non-discretionary and discretionary expenses, respectively, made with credit. Clothing and accessories, at 40%, and streaming subscriptions, at 28%, follow as the most common discretionary expenses. Other top non-discretionary expenses include monthly bills (34%), vehicle maintenance (22%) and healthcare (19%).
For several types of home-related expenses, cash cushion users are the most likely to use credit. This includes home repair or contractors, household furnishings and appliances. For both groceries and restaurants, cash cushion users’ behavior falls closer to credit treadmill users. However, for other common categories, cash cushion users look more like reward seekers. For example, 24% of reward seekers and 23% of cash cushion users pay for vehicle maintenance with credit, versus 17% of credit treadmill users.
How credit drives cash cushion consumers to make “upsell” purchases
Many consumers point to two key reasons for using credit products: convenience and rewards programs. But for cash cushion users, credit may play another role, accessing “better” products. More than 4 in 10 individuals with credit or store cards who made a credit purchase in the last 90 days name these as drivers, for both discretionary and non-discretionary expenses. Preserving their cash cushion follows, with about one-quarter citing this reason. The data here emphasizes the multifaceted dynamics of credit use.
Convenience and rewards basically tie for cash cushion users, with about 37% naming both as reasons they used credit. This is lower than the share of reward seekers who said the same, but higher than among credit treadmill users. Twenty-three percent of cash cushion users said that using credit allows them to make a bigger purchase. This “upsell” factor is substantially larger than for either reward seekers, at 12%, or credit treadmill users, at 17%. Another driver that matters more to credit cushion users is the ability to split payments into installments, at 23%. This compared to only 8.4% for reward seekers and 18% for credit treadmill users.
Lack of credit options makes some consumers abandon their purchases
Consumers must decide on a “plan B” when their chosen credit product is unavailable at the time of payment. The most common alternative is simply not to make the purchase. Thirty-seven percent of respondents with credit or store cards who made a recent credit purchase said they would be very or extremely likely to do this for discretionary expenses, and 33% said the same for non-discretionary purchases. Similar shares said they would be highly likely to try a different credit product. Around 3 in 10 said they would choose a cheaper option instead or delay making the purchase or payment.
Cash cushion users are more likely than reward seekers to skip or delay their purchases. For discretionary expenses, 42% of cash cushion users would simply not make the purchase, compared to 29% of reward seekers. Likewise, 38% of cash cushion users would likely pass on non-discretionary purchases, versus 25% for reward seekers. That said, credit treadmill users are the most likely to skip purchases when they cannot access credit. These trends repeat for the shares of each group who would delay the purchase in question. Overall, the data shows that when cash cushion users cannot access their desired credit options, they are more likely than reward seekers to make tradeoffs.
Read More
PYMNTS Intelligence has extensive coverage of the credit economy. To learn more about this topic, read the other reports in this series:
Methodology
“Consumer Credit Economy Report: Cash Cushion Credit Users,” a PYMNTS Intelligence exclusive report, is based on a survey of 2,016 U.S. consumers conducted from June 3 to June 14. The report takes a deep dive into credit use patterns, with a focus on cash cushion users. 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 38% of participants earn more than $100,000 annually.
