Americans are increasingly turning to buy now, pay later (BNPL) apps to purchase their daily needs amid sky-high inflation, according to a new survey.
BNPL options allow consumers to pay for purchases in installments.
LendingTree commissioned Qualtrics to conduct an online survey of 2,044 U.S. consumers ages 18 to 77 on March 7–8.
The study finds 46 percent of consumers have used the payment method for clothing, shoes, and accessories. Home furniture and appliances came in as the next largest category at 34 percent. Technology and beauty products came in at 27 percent and 26 percent, respectively.
Furthermore, 21 percent of shoppers used the plan for groceries, according to the survey. Some 27 percent of users use the loans as a bridge to their next paycheck.
BNPL took off during the COVID-19 pandemic as consumers with tighter wallets sought alternative funding.
The BNPL option resembles a personal loan where payments are split into equal installments over a period of time. This form of payment is often interest-free as long as payments are made in full on time, which makes it an attractive alternative to credit cards.
However, things don’t always work out, as the survey noted that more than half of users say they’ve regretted a BNPL-financed purchase, and 40 percent of these users have paid late in one of the loans.
As with credit cards, late fees will pile up if BNPL users fall behind on payments, hurting their credit scores.
The U.S. market has several BNPL apps, such as Klarna, Affirm, Afterpay, and Sezzle. The growth in BNPL use has led other companies to join the industry, with Apple Inc. introducing Apple Pay Later in late March.
