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By Aliss Higham
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More Americans are relying on personal loans to pay for routine living expenses, as inflation, high housing costs and rising debt burdens continue to squeeze household finances, according to a new report from LendingTree.
The report, compiled from online inquiries about personal loans on the LendingTree platform from April 2025 through March 2026, found that 8.2 percent of personal loan requests on the platform are now being used for everyday bills, making it the fourth most common reason people seek a loan.
That figure has more than doubled from 3.4 percent in 2023, when everyday expenses ranked as only the 10th most common borrowing reason.
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Multiple Economic Pressures
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The findings point to growing financial strain among borrowers who are increasingly turning to loans not for large purchases or debt restructuring, but to cover basic essentials such as groceries, utilities and rent. It comes at a time when the U.S. has recorded its highest inflation in four years—3.8 percent in April—mostly driven by high fuel and energy costs.
The report found those borrowers seeking loans for everyday bills requested an average of $4,317, among the lowest loan amounts tracked in the report. They also had relatively low credit scores, averaging 574, compared with the average U.S. consumer FICO score of 713, according to Experian data cited in the report.
Younger Americans At Risk
Younger borrowers are the most likely to seek personal loans for routine expenses. Among Generation Z borrowers ages 18 to 29, 10.5 percent of loan requests were for everyday bills. That compared with 9.3 percent among millennials aged 30 to 45, 6.6 percent among Generation X borrowers aged 46 to 61, and 5.6 percent among baby boomers aged 62 to 80.
Ali Zane, personal finance expert and CEO of IMAX Credit Repair Firm, said the figures show there are broader economic pressures facing younger Americans, rather than irresponsible spending habits.
"There is nothing about Gen Z being spendthrift and careless in the data stating 10.5 percent of Gen Z personal loan requests go for everyday expenses against 5.6 percent of such loans for baby boomers," Zane told Newsweek.
"Gen Z members entered the labor market during the worst economic times in the past twenty years: the aftermath of the 2008 recession, rise in student loans, and the COVID pandemic period."
Zane said many younger workers face housing costs that consume a large share of their earnings before they even account for food, utilities or transportation.
Ashley F. Morgan, debt and bankruptcy lawyer and owner of Ashley F. Morgan Law, also pointed to structural economic pressures affecting younger households.
"First, younger consumers generally entered adulthood during periods of extremely high housing costs, inflation, student loan burdens, and rising interest rates,” Morgan told Newsweek. “Many younger households have had difficulty building savings or accumulating assets compared to prior generations at the same age."
Morgan added that younger consumers are also more accustomed to using financial technology products and alternative lending tools, including Buy Now, Pay Later (BNPL) services and paycheck advances.
"Personal loans, BNPL products, and app-based financing options have become normalized financially for younger generations in a way they were not for many older borrowers," she said.
Squeezed Household Budgets
The report linked the increase in borrowing for everyday expenses to a combination of persistent inflation, elevated interest rates and worsening housing affordability. According to LendingTree, wages have not kept pace with the rising costs of essentials, leaving many consumers with little room in their monthly budgets. From April 2025 to April 2026, U.S. wages rose 3.6 percent, while inflation was 3.8 percent, meaning pay growth lagged behind prices.
"I regularly talk to people using borrowed money for groceries, utilities, rent shortages, insurance, daycare, vehicle repairs, or simply trying to keep up with existing minimum payments,” Morgan said. “A lot of consumers are not taking out loans because they are making reckless luxury purchases. Many people are trying to maintain basic financial stability while dealing with rising costs and stagnant income growth."
He described one client who took out four personal loans within eight months to cover car repairs, medical bills and routine expenses, eventually losing 187 points from her credit score over two years.
“It is quite obvious she earns not enough to cover her expenses,” Zane said. “They do this because their check does not cover their expenses anymore.”
Lower Credit Score = Higher Risks
The report found borrowers with lower credit scores were significantly more likely to seek personal loans for everyday bills. Among borrowers with credit scores below 580, which are classed as deep subprime, 9.4 percent of loan requests were for routine expenses, while only 2.8 percent of borrowers with super-prime credit scores of 800 or higher sought loans for that purpose.
Overall, 57.5 percent of requests for personal loans for everyday bills came from borrowers with credit scores below 580.
"The connection between low credit scores and borrowing for everyday bills is particularly concerning," Morgan said. "A 574 average credit score generally means many borrowers are already financially stressed before taking out the loan."
"Someone may temporarily feel relief after receiving the loan proceeds, but six months later they are carrying both the new personal loan payment and increasing credit card balances again, she said. "So that $4,317 personal loan will become a much more costly one, approximately $5,500 including the interest payment," he said.
Holiday Spending Adds Pressure
The report also found personal loan requests for everyday bills peaked in December, potentially reflecting added financial strain during the holiday season.
The share of such loan requests rose from 7.5 percent in April 2025 to 9.4 percent in December before falling to 5.7 percent in February 2026 and then increasing slightly to 6.2 percent in March.
"It seems pretty logical for people to seek personal loans in December because of holiday expenses," Zane said. "However, what should actually be happening then? One would take some money out of their savings accounts for holiday purchases. But it is obvious that people do not have any money saved since they apply for personal loans in December."
Across The States
Louisiana recorded the highest share of personal loan requests for everyday costs at 10 percent, followed by New Hampshire at 9.8 percent and Pennsylvania at 9.7 percent. Nevada and Oregon recorded the lowest shares at 6.2 percent, followed by Massachusetts at 6.5 percent.
Zane said the differences likely reflect local economic conditions and cost-of-living pressures.
"The fact that Louisiana, New Hampshire, and Pennsylvania are mentioned among those with the largest share of personal loans for everyday expenses proves that people live in conditions where they cannot earn decent money anymore because their salaries are very low, job opportunities decreased, and cost of living is too high," he said.
"People who take such loans are not irresponsible. They have no other options."
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