From Pymnts · PYMNTS · · 1m 10s
Overdrafts Expose Credit Divide
60% of overdraft users face credit denial, revealing financial inequality.
In brief
60% of overdraft users face credit denial, revealing financial inequality. Overdraft fees correlate with credit denials, showing how cash flow struggles limit credit access for lower-income households. Originally reported by Pymnts.
Overdraft Fees and Credit Denials
Sixty percent of consumers who paid an overdraft fee also reported a credit denial during the same 12-month period.
“Sixty percent of consumers who paid an overdraft fee also reported a credit denial during the same 12-month period.”
Financial Pressure Drives Overdraft Use
Thin savings leave many households choosing among checking balances, credit, delayed bills and other short-term sources of money.
Overdraft Use Concentrated Among Lower-Income Groups
Twelve percent of banked adults paid an overdraft fee in 2025. The share reached 20% among consumers with family incomes between $25,000 and $49,999 and 17% among those earning less than $25,000.
Credit Access Drops for Lower-Income Households
Only 41% of consumers earning less than $50,000 believed they would probably or definitely be approved for a new credit card.
Cash Flow Underwriting Expands Credit Decisions
Lenders are putting more of that information into underwriting, but are gaining more of a holistic picture than might otherwise be obtained.
Experian and Plaid Launch Cash Flow Models
Experian launched a cash flow consumer reporting agency that organizes consumer-permissioned bank transactions and balance information for underwriting.
In short
Overdraft fees correlate with credit denials, showing how cash flow struggles limit credit access for lower-income households.
