More than 78 million Americans used Buy Now and Pay Later, and Buy Now in the past year.

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More than 78 million Americans used Buy Now and Pay Later in Past Year
NERDWALLET 2022 PERSONAL LOANS REPORT
By Elizabeth Renter Senior Writer/Spokesperson | Data analysis, Personal finance, Economics Elizabeth Renter spends her time searching for consumer insights from datasets and crunching the numbers for all things personal financial. She has had her work mentioned in The New York Times, The Washington Post, the "Today" show, CNBC and elsewhere. Before being a part of NerdWallet at the beginning of 2014, Elizabeth was freelance journalist. When not engaging in math and words, Elizabeth enjoys traveling, powerlifting and restoring her Victorian home. She is based at Clay Center, Kansas.





October 11 Oct 11, 2022


Written by Kim Lowe Lead Assigning Editor Consumer loans Kim Lowe leads the personal loans editorial team. She came to NerdWallet after 15 years of managing the content on MSN.com that covered food, health and travel. She started her career as a writer for magazines covering mortgages, supermarket and restaurant 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 your utility bill increases it is easy to find space in your budget to cover these expenses. And when the cash doesn't come in, you can turn to other, sometimes more costly alternatives.
The majority of Americans would most likely use credit card to cover bills and cover other household expenses during difficult economic times, if they didn't have cash on hand Some would resort to alternative sources that are more modern and innovative in the wake of a NerdWallet survey of 2,065 U.S. adults conducted Aug. 4-8 online by The Harris Poll.
According to the survey the survey, 14% are likely to use "buy now, buy later" services, and 11% would opt for cash advance apps on mobile devices to pay bills and cover other household expenses during difficult economic times.
"Buy now, pay later isn't just for clothes and shoes. People use these services for needs like groceries, gas and medical costs," says Annie Millerbernd the head of NerdWallet's personal loans. "They appear to be a simple method to pay for essentials when you're short on cash, but problems occur when you aren't able to make the payment in time."
In the last year, millions of Americans have embraced these financial tools that are relatively new, and the youngest adults tend to lead the charge in the study.
Editor's note: All through the report, in discussing 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 use to pay bills and other household expenses in the event they didn't have money available to cover the expenses.
Key conclusions
Credit cards are a mainstay, but buy now, pay later can also be a source during trying economic times. The majority of Americans (50 percent) would be most likely to utilize credit cards for payments and other household expenses in tough economic times, when they don't have cash in their wallets. Certain people would choose to use newer methods of funding 14% of respondents would be most likely to use buy now or pay later, while 11% would use cash advance mobile apps to pay costs and bills during these times, according to the study.

Millions of people have used buy now and pay later over the past year. Nearly the 78-million Americans (30 percent) have used buy now, pay later over the past twelve months, the study found. Of them, they've utilized it six times, on average.

Apps for cash advances on mobile devices can give millions of Americans quick cash. Around 49.2 million Americans (19 percent) have used apps for cash advances on mobile devices in the past 12 months. Similar to BNPL and BNPL, these apps are particularly popular among younger generations: 38% of Gen Z (ages between 18 and 25) and 39% of the millennials (ages 26-41) have used them over the past year, while 11% among the Generation X (ages 42 to 57) and the baby boomers, who comprise 2% (ages 58-76), according to the survey.
More Americans utilize BNPL than personal loans. In the last 12 months, 24 percent of Americans which is 62 million, have taken out at minimum one personal loan taking out $5,046, in the average in that time, the survey found.

Where do Americans turn in difficult times
The majority of Americans (50 percent) would be most likely to use credit cards for bills as well as other expenses for the household if they didn't have money to cover these expenses during tough economic times, like a recession job loss , or unexpected expenses. Credit cards were the most frequently mentioned financial source according to the study.
Fewer, 43% of Americans, would turn to their emergency savings to cover these expenses in those instances, the survey found. Saving money like this takes some time and your budget to allow it to happen. Understandably, not everyone has the funds to make such savings.
To see a graph of how all generations responded to the poll, .
"There are plenty of ways to borrow when funds are tight, but credit cards and personal loans aren't without their own strict borrowing conditions," Millerbernd says. "Buy now or pay later, and cash advances are easier to qualify for but could lead people to overextend themselves."
Pay later, buy now is overwhelmingly popular again
Around 77.7 millions Americans have used within the last 12 months, according to the survey. It's 30% of Americans less than 37% when we asked in September 2021.
It's been used frequently around six times in the last twelve months, on average.
Pay later and buy now This is an installment loan made at the point of purchase, whether that's at the cash register or on the internet. These types of services allow you to spend more than you normally would since you're paying only part of your bill at the point of purchase. They also are accompanied by potential fees that are significant, especially in the event of a late payment. Because the loans typically do not require a test of credit score, they may be appealing to those with poor credit scores or aren't eligible for other forms of credit.
Half of the millennials (50 percent) and 44% from Gen Z have used BNPL over the last 12 months, according to the study. This compares to 25% from Gen X and 14% of baby boomers.
49.2M users have embraced mobile cash advance apps over the past year
About 49.2 million Americans (19 percent) have utilized a service within the last 12 months, as per the study.
Mobile cash advance applications often referred to as paycheck advance apps, essentially loan the user money from your upcoming pay check. These loans have limits, generally up to several hundred dollars and some of them include fees for subscriptions or other charges built in. While they could be a quick source of cash when expenses arise and you're not able to access other sources, they can be expensive considering the amount of money you're borrowing.
Similar to BNPL Mobile cash advance use is more frequent among younger generations. For instance, 38 percent of Gen Z, 39% of young people, 11% of Gen X and 22% of baby boomers have utilized these apps over the last year.
Furthermore the apps tend to be used by people with less income -- 26% of those who have a household income of less than $50 and 22 percent of people who have a household income of $50,000-$74,999 have used them in the past twelve months, as opposed to 15% of those with household incomes of $100,000 or more.
Personal loans are a source of financing to one-quarter of Americans
Personal loans are a reliable source of funds to pay off debts or for purchasing new goods. They are a fixed-rate loan and the interest rates are lower for qualified borrowers. However, the proportion of Americans who use personal loans is lower than the percentage of borrowers who utilize BNPL services. The two sources of funding could, in some cases, be utilized for similar objectives.
Within the past 12 months, around 60 million Americans (24%) are taking out at minimum one personal loan, down slightly from 29% in the previous year .
On average, these borrowers took out $5,046. An impressive 28% of the borrowers borrowed $5,000 or more over the one-year timeframe.
Time horizon: A way to choose your money source
Ideally, when you wish or require to purchase something, you can do so outright with available cash, a debit card or a credit card you can pay in full before the due date. But unexpected expenses and trying financial times may arise and, sometimes, big purchases aren't able to fit within your budget.
Although all of these sources have you paying them back at some point, thinking about the time frame you'll need to pay off the expense is an excellent starting point in choosing the right source.
Short-term funding
If you need money quickly and only for a brief time frame, you can consider these options. The costs that come with them -- including fees and/or interest can be high, so you'll need to plan for a quick payoff and ideally utilize them to meet your needs rather than wants.
Cash advance mobile apps are useful in the event of an emergency, or in the absence of an emergency fund. They can be used to cover a gap in your income or to pay the cost of a utility bill due within a few days of your paycheck, for example. Be aware that they can make it easy to continue borrowing.
Credit cards: Credit cards are the best way to pay for costs, so long as you can pay the balance before the due date. Fail to do this, and interest charges will quickly mount up.
Medium-term funding
Debt consolidation and unexpected large expenses , such as a home appliance that quits or vehicle repairs could not take years to pay off, but certainly longer than a couple of weeks.
Credit card with 0% APR If you are eligible, some credit cards offer one year or more of interest-free credit. They can be especially useful for the transfer of credit card debt with high interest or to cover unexpected costs. Be sure to pay off the outstanding balance before the interest-free time ends, or you'll owe the interest you accrued in that time also.
Buy now, pay later The terms vary from BNPL company, though some may offer terms that last several months or even years. The downside is that most do not report timely payments to credit reporting agencies, which means they're not helping improve your credit score.
Financing sources with a longer-term term
Sources that allow you to pay off the loan or credit line over a longer time frame may require credit requirements that aren't available for short-term loans. But, the advantage is that it will not "cost" you as much , since fees and interest are typically less.
Personal loan: Personal loans may have a high minimum requirement for approval, but they could be a source of significant amounts repaid over a long term. If you can get them through traditional banks and credit unions, you may qualify for an interest rate that is lower if you're an existing account holders.
401(k) loan: These loans , because you're borrowing against your savings, and in the event the job you're working in is terminated and can't repay it then your loan could be subject to penalties and taxed as the result of a withdrawal. However, interest rates can be attractive and loan amounts can be generous and they don't require a credit check.
Home equity line of credit, also known as cash-out refinances: Homeowners may make use of additional sources of funding by tapping into the equity in their home. This kind of loan can be low-interest, but as with mortgages, it can also put your home's value in danger should you default.
"Emerging financing options like BNPL and cash advance applications are throwing a wrench into the standard range of financing options," Millerbernd states. "The most important thing to do when borrowing money is knowing the method of repaying it ahead of time."
METHODOLOGY

This survey online was conducted in the U.S. by The Harris Poll on behalf of NerdWallet between Aug. 4-8, 2022 with 2,065 U.S. adults ages 18 and older. The precision of sampling of Harris online polls is assessed using a Bayesian reliable interval. This study shows that the accuracy of the sample data is up to +/-- 2.8 percentage points using a 95% confidence level. To learn more about the methodology of the survey including weighting variables as well as subgroup sample sizes, contact Alikay Wood at
Calculations to determine how many Americans have used personal loans; buy nowand pay later; as well as mobile cash advances applications Based on estimates of the population for 2021 taken from Census of the U.S. census.
The survey question about the sources of funding used during tough economic times was stated as "Which one of these sources are you most likely to utilize to pay your bills and cover other household expenses during difficult financial times (e.g., a recession or job loss, unanticipated costs) in the event you were not able to have money available to cover the expenses? Please choose all of the ones that you can."
Disclaimer
NerdWallet does not make, either expressly or implicitly, any warranties whatsoever, which includes the merchantability and fitness for a specific purpose or whether the information provided in the article is accurate, reliable or free of errors. The use or reliance you place on this information is at your own risk and its accuracy and completeness are not guaranteed. The information contained of this article should not be relied upon or associated with the performance in the future that of NerdWallet nor any of its subsidiaries or affiliates. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties. They are expressed in terms such as "believes," "expects," "estimates," "may," "will," "should" or "anticipates" or similar phrases. These forward-looking statements could materially differ from NerdWallet's representation of data to analysts as well as its actual operational and financial results.










About Elizabeth Renter's job as a senior writer and data analyst at NerdWallet has been quoted as a result of her work by The New York Times, The Washington Post, CNBC and many other publications.







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