Credit Cards, Friends and Family and Savings Aren’t Helping Nonprime Americans, According to Research from Elevate’s Center for the New Middle Class

  • 72 percent of nonprime Americans are unable to charge $500 to a
    credit card
  • 64 percent are unable to borrow $500 from family and friends for
    an urgent, unexpected expense

FORT WORTH, Texas–(BUSINESS WIRE)–It’s no secret that nonprime (subprime) Americans have limited personal
resources to weather unexpected expenses – but new data from Elevate’s
Center for the New Middle Class reveals that informal,
relationship-based options for emergency loans are largely unavailable
as well. According to research released today by the Center, which
researches and reports on the realities of being nonprime in America,
almost 70 percent of nonprime Americans couldn’t cover an urgent expense
of $500 or more with their savings and 64 percent wouldn’t be able to
borrow that amount from friends and family. These findings complement
the Federal Reserve Board’s 2016 finding that 46 percent of Americans do
not have $400 in savings to cover an emergency expense.

This latest study focuses on how nonprime Americans – defined as those
having a credit score below 700 – borrow money as they are largely
barred from traditional prime products, like personal loans from banks
or even loans from new online lending companies that are focused on
prime consumers.

Additional key findings include:

  • 71 percent would not be able to borrow $2,000 from family or friends
    if an urgent need arose
  • 72 percent of nonprime Americans would not be able to put $500 on a
    credit card
  • 80 percent would not be able to put $2,000 on a credit card
  • 59 percent said they “regularly” carry a credit card balance
  • Only 1 in 5 nonprime Americans have borrowed from friends or family in
    the last 12 months
  • 7 percent use overdraft protection strategically, using it to cover
    expenses for which they did not have money

“The fact that 69 percent of nonprimes are unable to cover an urgent
expense of $500 with their savings highlights the gap between need and
availability of borrowing options. Given the need, very few people have
the option to borrow from their support systems, with only 21 percent of
nonprimes saying they’ve borrowed from family and friends in the past 12
months,” said Jonathan Walker, executive director of Elevate’s Center
for the New Middle Class. “Despite the widely perceived ease of asking
friends and family for money, it’s simply not an option for most
nonprime Americans.”

Walker commented, “It’s findings like these that reinforce how important
it is for the Center to continue to build understanding of and champion
this growing group of consumers, and through research, provide
information to help determine what will best serve their needs.”

In its mission to engage and discuss the unique needs of nonprime
Americans – those generally with credit scores below 700 – Elevate’s
Center for the New Middle Class’s ongoing research efforts outline just
how critical access to credit is, as well as the ways in which this
market can be financially savvier than prime counterparts as they seek
better options in a market rich with options for prime consumers.

About this Research

The Center’s research compared the responses of 600 nonprime Americans
using interviews conducted December 2015 to January 2016. For more
details on the study, click
here
.

About Elevate’s Center for the New Middle Class

Elevate’s Center for the New Middle Class conducts research, engages in
dialogue, and builds cooperation to generate understanding of the
behaviors, attitudes, and challenges of America’s growing “New Middle
Class.” For more information, visit: http://www.NewMiddleClass.org

About Elevate

Elevate has originated more than $3.7 billion in nonprime credit to 1.5
million consumers to date. Its innovative online credit solutions
provide immediate relief to customers today and help them build a
brighter financial future. The company is committed to rewarding
borrowers’ good financial behavior with features like interest rates
that can go down over time, free financial training and free credit
monitoring. Elevate’s suite of groundbreaking credit products includes
RISE, Sunny and Elastic. The company is privately held and is backed by
respected Silicon Valley venture capital firms including Sequoia Capital
and Technology Crossover Ventures. For more information, visit: http://www.elevate.com/.

Contacts

Media:
Vested
Ishviene Arora, 917 765 8720
elevate@fullyvested.com