Nearly 78M Americans used Buy Now and Pay Later in Past Year

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More than 78 million Americans used Buy Now and Pay Later, and Buy Now in the past year.
NERDWALLET 2022 PERSONAL LOANS REPORT
By Elizabeth Renter Senior Writer/Spokesperson | Data analysis, Personal finance, Economic analysis Elizabeth Renter spends her time looking for consumer-oriented insights from data sets and crunching numbers on all matters of personal financial. The work she has done was mentioned by The New York Times, The Washington Post, the "Today" show, CNBC and elsewhere. In the past, prior to her becoming a member of NerdWallet at the beginning of 2014, Elizabeth worked as a freelance journalist. When she's not playing with words and numbers, Elizabeth enjoys traveling, lifting weights and restoring her Victorian home. She lives in Clay Center, Kansas.





Oct 11 Oct 11, 2022


Edited by Kim Lowe Lead Assigning Editor Consumer loans Kim Lowe leads the personal loans editorial team. The editor joined NerdWallet after 15 years in charge of content for MSN.com that covered food, health, and travel. Kim began her career as a writer for publications that covered the mortgage food, restaurant and supermarket industries. Kim earned a bachelor's degree in journalism from the University of Iowa and a Master of Business Administration from the University of Washington.







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If your car is in a state of repair or the cost of your utilities is soaring, you find space in your budget to pay for these costs. If the money doesn't exist, you may turn to other, often more costly alternatives.
While 50% of Americans are likely to use credit card to cover their bills and pay for other household expenses during difficult economic times, if they did not have cash in their wallets Some would resort to more innovative, alternative sources as per a NerdWallet survey of 2,065 U.S. adults conducted Aug. 4-8 online by The Harris Poll.
According to the study 14% of respondents will most likely utilize "buy now and pay later" services, and 11% would use cash advance apps on mobile devices to pay for bills or other household expenses during difficult economic times.
"Buy now and pay later" isn't just for clothes and shoes. Customers use these services to cover needs like groceries, gas and health care costs," says Annie Millerbernd, NerdWallet's authority on personal loans. "They seem like an easy option to cover the essentials if you don't have money, but the problem arises when you aren't able to pay later."
In the last year many millions of Americans have embraced these relatively new financial tools and the youngest of us tend to lead the charge, according to the survey.
Editor's note: Throughout the report, when we discuss what sources of financing Americans are most likely to use in tough economic times in the future, we're referring to sources they'd most likely utilize to pay for bills and other household expenses in the event they didn't have money in their bank account to cover these expenses.
Key findings
Credit cards are an essential part of our lives but buying now and pay later can also be an option during difficult economic times. The majority of Americans (50%) are most likely to use credit cards to pay payments and other household expenses in times of economic hardship in the event that they did not have cash on hand. Some might opt for more modern funding types: 14% would be most likely to use buy now or pay later options, and 11% would use mobile cash advance apps for costs and bills during these times, as per the survey.

Millions of people have used buy now and pay later services in the last year. More than the 78-million Americans (30 percent) have used buy now, pay later within the past twelve months, the study revealed. Of them, they've utilized it six times on average.

Apps for cash advances on mobile devices can give millions of Americans quick cash. Roughly 49.2 million Americans (19%) have utilized mobile cash advance apps over the past 12 months. Similar to BNPL and BNPL, these apps are most popular among younger generations: 38% in Generation Z (ages between 18 and 25) and 39% of millennials (ages 26-41) have used them over the past year, versus 11 percent from Generation X (ages between 42 and 57) and the baby boomers, who comprise 2% (ages 58-76), according to the survey.
More Americans use BNPL than personal loans. In the past twelve months 24 percent of Americans, or 62 million, have taken out at minimum one personal loan taking out $5,046, in the average during the timeframe according to the study.

Where Americans are able to turn when they face difficult times
Half of Americans (50%) would likely to utilize credit cards for bills or other home expenses, if they did not have cash to cover them in tough economic times like a recession job loss , or unexpected costs. The credit card was the second most frequently used financial source, in the survey.
The majority, or 43% of Americans, would turn to their savings for emergencies to pay such expenses during those times The survey revealed. Saving money such as this requires time and space in your budget to make it happen. It is true that not all people have the funds to make such savings.
To see a graph of the responses of all generations to the questionnaire, .
"There are many ways to borrow when funds are in a tight spot, however credit cards and personal loans can have tough borrowing conditions," Millerbernd says. "Buy now or pay later, and cash advances are easier to qualify for but could cause people to overextend themselves."
Buy nowand pay later is overwhelmingly popular again
Around 77.7 million Americans have used within the past 12 months, according to the survey. The figure is 30% of Americans, down slightly from 37% in the survey we conducted in September 2021.
And they've used it frequently -- about six times in the last 12 months, which is about average.
Pay later, buy now This is an installment loan that is made at the time of purchase, which could be the cash register or online. This type of service can enable you to spend more than you normally might because you're paying just part of the cost at the point of purchase. They also come with the risk of potentially significant fees, particularly in the event of a late payment. Because loans typically don't require a formal background check for credit, they could appeal to people who have poor credit scores and wouldn't qualify for other types of credit.
Half of Gen Z and millennials (50 percent) and 44% from Gen Z have used BNPL in the last 12 months, according to the survey. This compares to 25% from Gen X and 14% of baby boomers.
49.2M use cash advance mobile apps in the last year
About 49.2 million Americans (19 percent) have used a within the past twelve months, according to the study.
Mobile cash advance applications commonly referred to as pay advance apps, basically loan your money out of your upcoming paycheck. These loans are subject to limits, typically between a few hundred dollars, and many of them have subscription fees or other fees built in. While they may provide quick cash when you need it and you're not able to access other sources, they can be expensive considering the amount you can borrow.
As with BNPL, mobile cash advance usage is more frequent among younger generations. 38 percent of Gen Z and 39% of young people 11 percent of Gen X, and the baby boomers, 2% have used these apps in the last year.
Additionally they are more likely to be utilized by people who earn less -- 26% of those who earn less than $50,000 and 22% who have a household income of $50,000-$74,999 have utilized them over the last twelve months, as opposed to 15% of people with household incomes of 100,000 or greater.
Personal loans can be a source of funding to one-quarter of Americans
The personal loans are a reliable source of cash to pay off debts or purchasing new items. They are a fixed-rate loan and the interest rates are very low for borrowers who are qualified. However, the percentage of Americans using personal loans is at present less than that of those who use BNPL services. Furthermore, the two financing sources can, in some cases, be utilized for similar goals.
In the last twelve months, 62 million Americans (24 percent) have taken out at minimum one personal loan which is a slight decrease from 29% in the previous year .
In the average, they took out $5,046. A full 28% of the borrowers borrowed $5,000 or more over the one-year period.
Time horizon: One method to select your money source
If you're looking to or require to purchase something, you are able to purchase it in full with cash or a debit card, or credit card. You can pay in full before the due date. However, unexpected expenses and challenging financial times may arise, and sometimes big purchases aren't able to fit in a budget.
Although all of these sources require you to pay them back over time taking into consideration how long you'll have to pay off the expense will help you in picking the right option.
Short-term finance
If you need money quickly and only for a short period, think about the following options. The cost related to these options (including interest and/or fees -- can be high, so you'll need to plan for the quick payment and use them for needs and not for wants.
Cash advance mobile apps are useful in the event in an emergency, and in case you don't have an emergency fund. They can be used to cover a gap in your income or pay for the cost of a utility bill due within a few days of your paycheck, for example. But be careful: They can make it easy to continue borrowing.
Credit cards: Credit cards are great for covering costs, as long as you pay the full amount by the monthly due date. If you don't, and interest charges will quickly mount up.
Long-term financing
Consolidation of debt and unexpected expenses , such as an appliance in your home that stops working or vehicle repairs may not require many years to pay, but certainly more than a few weeks.
0% APR credit card If you are eligible, some credit cards offer up to a year of free credit. They can be especially useful for transferring high-interest credit card debt or for large unexpected expenses. Be sure to pay off the balance before the interest-free period ends, or you'll owe interest accrued during that time also.
Buy now, pay later The terms vary from BNPL company, however some might offer terms that run for a few months or years. A downside is that they don't report on-time payments to credit bureaus, so they're not helping improve your credit score.
Sources of funding for the longer term
Sources that allow you to pay off a loan or credit line over a longer time frame may have credit qualifications which short-term alternatives don't. However, one benefit is that the loan doesn't "cost" you as much , since the interest and charges are usually lower.
Personal loan: Personal loans might have a very high bar for qualification, but they can be an important source of funds which are paid back over a long period. When available through traditional credit unions or banks, you may qualify for the lowest rate if you're an existing account owner.
401(k) loan: These loans , because you're borrowing against your savings, and in the event that there's a job loss and you you aren't able to pay it back the loan could be penalized and taxed as the result of a withdrawal. However, interest rates may be favorable and loan amounts can be generous and do not require a credit check.
The home equity line of credit, also known as cash-out refinances: Homeowners may make use of additional sources of funding through tapping into the equity of their homes. This type of financing could have low interest costs but as with mortgages, it can put your home in danger should you default.
"Emerging financing options like BNPL and cash advance applications have thrown a wrench into the standard set of financing options," Millerbernd states. "The crucial factor to successfully borrowing money is knowing how you'll repay it prior to the due date."
The METHODOLOGY

The online survey took place in the U.S. by The Harris Poll on behalf of NerdWallet between Aug. 4-8, 2022, with 265 U.S. adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credibility interval. This study shows that the data from the sample is precise by +/- 2.8 percentage points using a 95% confidence level. For more information on the survey's methodology, including weighting variables and subgroup sample sizes, please contact Alikay Wood at
Calculations that determine the number of Americans have used personal loans purchase today, pay later as well as mobile cash advances applications based on 2021 population estimates from the U.S. census.
The survey question regarding funding sources used in tough economic times was phrased "Which of the following sources are the most probable sources you will utilize to pay bills and cover other household expenses during difficult economy (e.g., a recession or job loss, sudden expense) in the event you were not able to have money in your bank to cover these expenses? Select all that are applicable."
Disclaimer
NerdWallet disclaims, expressly and impliedly, all representations and warranties whatsoever, which includes merchantability and fitness for a particular purpose or whether the information contained in the article is accurate, reliable or free of errors. The use or reliance you place on the information provided is at your own risk and its accuracy and completeness cannot be guaranteed. The contents of this article should not be relied upon or associated with the performance in the future that of NerdWallet or any of its affiliates or subsidiaries. Statements that are not actual facts are forward-looking statements and involve risks and uncertainties, as stated by terms like "believes," "expects," "estimates," "may," "will," "should" or "anticipates" or similar phrases. These forward-looking statements could significantly differ from NerdWallet's presentation of data to analysts as well as its actual financial and operational results.










About the author: Elizabeth Renter's work as an experienced chief writer as well as data analyst for NerdWallet has been cited by The New York Times, The Washington Post, CNBC and other sources.







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