The Rise of Fintech Banking Among Low-Income Members: 45% of members use fintech banking. These members tend to have lower incomes, lower rates of employment, and a higher likelihood of living with a disability than members who turn to traditional (brick-and-mortar) banks.

Lower-income Individuals Pay Significantly More for Banking Services: Almost half (49%) of members paid overdraft fees in the prior 12 months; members who identify as Black or Hispanic and who have lower incomes are more likely to pay these fees, underscoring that lower-income people pay significantly more for banking services. Fees are the top reason for closing traditional bank accounts and using fintech bank accounts.

BNPL Use is Widespread, but Comes with Challenges: Over 40% of members used BNPL in the past year. Among users, 63% said they had one or more problems with these products, such as overspending or missing payments.

Cash Advance and EWA Users Are Less Likely to Have Credit Cards: Compared to members who use BNPL, members who use Cash Advance or EWA products are less likely to own credit cards. Users of all three products are more likely to use payday loans than non-users.

BNPL vs. Short-Term Credit: Different Needs, Different Motivations: BNPL use is more associated with convenience and preference while online Cash Advance and employer-provided earned wage advance are more associated with paying bills on time and dealing with unexpected expenses and drops in income. 

Parents Are the Most Frequent Users of Short-Term Credit Products: Use of all three short-term credit products is highest among SaverLife members with children, underscoring the need for additional financial support for parents (such as increasing and expanding the Child Tax Credit).

Fintech Borrowers are at Higher Risk of Financial Instability: Even after accounting for income and other factors, fintech credit users—particularly those using Cash Advance and Earned Wage Advance (EWA)—are more likely to experience financial hardship than non-users. While our research doesn’t necessarily indicate that these products cause financial struggles in and of themselves, it does show that people already in financially precarious situations are more likely to rely on them to make ends meet.

Financial Stress Drives Cash Advance Use: A large percentage of fintech credit users experience income volatility or unexpected expenses in the months before using these products. For example, Cash Advance use spikes following months of high financial stress. This suggests that these loans are primarily used to cover past financial gaps rather than prevent future ones, reinforcing cycles of financial instability.

Debt stacking is common, creating a hidden risk in fintech credit: Many users don’t just rely on a single credit product—they stack multiple forms of credit, including fintech credit, mainstream credit (credit cards), and high-cost credit (auto-title or payday loans). This suggests that fintech credit isn’t replacing high-cost borrowing; it’s adding to it, making it even harder for consumers to keep up with payments and avoid financial strain.

Debt Burden is Higher Among Users: Fintech credit users report significantly more debt-related problems and difficulty making payments on credit cards, loans, and other financial obligations. On average, users of fintech credit products are more than twice as likely to be behind on debt payments and nearly twice as likely to have debt in collections.

Fintech Credit is Linked to Increased Overdrafts: Members who use fintech credit products are significantly more likely to incur overdrafts in the following months, highlighting ongoing cash shortfalls. Despite being marketed as tools for financial flexibility, these products do not reduce overdrafts—instead, users experience an increase, suggesting they may contribute to financial strain rather than alleviate it.

Fintech Credit Product Use is a Barometer of Financial Distress: Rather than acting as a financial bridge, these products often signal deeper financial challenges. Users are more likely to experience food and housing insecurity, use multiple credit products, and experience difficulty managing high levels of debt.