Life is unpredictable, and unforeseen expenses like car repairs or medical emergencies can hit hard, leaving many scrambling to find ways to cover the costs. For those without a financial safety net, this can lead to high-interest borrowing or late fees for missed payments.

According to a May 2023 report from the Federal Reserve on the economic well-being of US households, only 63% of Americans stated they could handle an unexpected $400 expense using their own funds or cash equivalents, such as paying off a credit card bill in full. The remaining 37% indicated they would need to borrow money, whether through credit cards, payday loans, or borrowing from friends or family. Some mentioned they might sell possessions to cover the expense, while 13% admitted they wouldn’t be able to afford it at all.