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
Written by Elizabeth Renter Senior Writer/Spokesperson | Analysis of data, Personal Finance, Economics Elizabeth Renter spends her time hunting for consumer takeaways from data sets and crunching figures for everything personal finance. The work she has done was mentioned by The New York Times, The Washington Post, the "Today" show, CNBC and elsewhere. Before becoming a member of NerdWallet in 2014, she was a freelance journalist. When she isn't working with numbers and words, Elizabeth enjoys traveling, powerlifting and restoring the beauty of her Victorian home. She is based at Clay Center, Kansas.





October 11, 2022


Written by Kim Lowe Lead Assigning Editor Consumer loans Kim Lowe leads the personal loans editorial team. The editor came to NerdWallet after 15 years in charge of content for MSN.com that covered food, health and travel. Kim began her career as a journalist for publications that covered the mortgage as well as the restaurant, supermarket and mortgage industries. Kim obtained an undergraduate 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 skyrockets there is room in your budget to pay for these costs. When the cash does not be available, you might have to resort to other, sometimes more costly options.
The majority of Americans are likely to use credit card to cover their bills and cover other household expenses in tough economic times if they didn't have cash in their wallets, others would turn to alternative sources that are more modern and innovative as per an NerdWallet research of 2,065 U.S. adults conducted Aug. 4-8 online by The Harris Poll.
According to the study, 14% would most likely use "buy now, buy later" services. 11% would opt for mobile cash advance applications to pay for bills or other household expenses during tough economic times.
"Buy now, pay later isn't only for clothes and shoes. People use these services for things like gas, groceries and health care costs," says Annie Millerbernd the NerdWallet's expert on personal loans. "They appear to be an easy way to cover essentials when you're not able to pay money, but the problem arises when you can't actually make the payment in time."
Over the past year, millions of Americans have made the switch to these financial tools that are relatively new and the youngest of us are often leading the charge in the study.
Editor's note: Throughout the report, when we discuss what funding sources Americans would most likely use in times of economic hardship We are discussing the types of sources they'd likely use to pay bills and pay for other household expenses in the event they did not have enough cash available to cover the expenses.
The key results
Credit cards are an essential part of our lives however, buying now and pay later can also be an option in difficult economic times. Half of Americans (50%) would be most likely to make use of credit cards to pay charges and other household expenditures in tough economic times, when they don't have cash in their wallets. Some might opt for more modern financing options: 14% would be more likely to utilize buy now, pay later and 11% would use cash advance apps on mobile devices to pay bills and expenses during such times, according to the survey.

Millions of people have used buy now and pay later over the past year. Around 78 million Americans (30 percent) have utilized buy now, pay later services within the past 12 months, the survey found. Of them, they've utilized it six times, in average.

Mobile cash advance apps offer millions of Americans quick cash. About 49.2 million Americans (19%) have used mobile cash advance apps in the last twelve months. Like BNPL and BNPL, these apps are the most popular with younger generations. For instance, 38 percent from Generation Z (ages between 18 and 25) and 39% of the millennials (ages 26, 41,) have used them in the past year, versus 11 percent from the Generation X (ages between 42 and 57) and 2% of baby boomers (ages between 58-76), according to the survey.
More Americans utilize BNPL than personal loans. Over the last 12 months 24% of Americans, or 62 million, have taken out at least one personal loan taking out $5,046, on average during the timeframe, the survey found.

Where do Americans are able to turn when they face tough times
The majority of Americans (50 percent) are most likely to make use of credit cards for paying bills and other household expenses if they didn't have money to cover these expenses in tough economic times like a recession job loss or unexpected costs. They were also the top frequently mentioned financial source according to the survey.
A smaller percentage, just 43 percent of Americans are likely to use their emergency savings to cover the costs during these times according to the study. Saving money like this takes time and enough room in your budget to allow it to happen. It is true that not all people have these savings.
A chart that shows how all generations responded to the poll, .
"There are many borrowing options when money is tight, but credit cards as well as personal loans aren't without their own strict borrowing requirements," Millerbernd says. "Buy now Pay later, buy now, or cash advances are much easier to obtain, but can lead people to overextend themselves."
Buy nowand pay later is becoming a hugely popular choice
The survey found that 77.7 million Americans have used the Internet in the last 12 months, according to the survey. The figure is 30 percent of Americans which is a slight decrease from 37% in the survey we conducted in September 2021.
It's been used frequently approximately six times in the last 12 months, which is about average.
Pay later and buy now can be described as an installment loan which is paid at the point of purchase, whether that's at the cash register or on the internet. These services can make it easy to pay more than you normally might because you're paying just part of your bill at checkout, and they can be a risky option, with possibly significant charges, particularly if you miss a payment. Because loans generally do not require a credit check, they might be attractive to those with low credit scores and otherwise would not be eligible for other kinds of credit.
Half of Gen Z and millennials (50 percent) and 44 percent of Gen Z have used BNPL in the last 12 months, according to the survey. This is in contrast to 25% from Gen X and 14% of baby boomers.
49.2M users have embraced mobile cash advance apps in the last year
Around 49.2 million Americans (19%) have used a smartphone in the last 12 months, as per the survey.
Apps for mobile cash advances, also known as paycheck advance apps, essentially loan your money out of your coming paycheck. These loans are subject to limits, typically of one hundred dollars and some of them include fees for subscriptions or other charges included. Although they can provide quick cash in the event of an emergency and you aren't able to tap other sources, they can be costly if you consider the amount borrowed.
As with BNPL and mobile cash advances, mobile cash advances are more common with younger generations. 38 percent of Gen Z and three-quarters of the millennials, 11 percent of Gen X, and 2% of baby boomers have used these apps within the past year.
Furthermore, these apps tend to be used by those with lower incomes -26% of those who earn less than $50,000 and 22% of those who have a household income of $50,000-$74,999 have used them within the last 12 months, compared with 15% of people with households earning $100,000 or more.
Personal loans are a source of financing that accounts for one quarter of Americans
Personal loans are a long-standing source of funds to consolidate debt or to purchase new products. The repayments are set and interest rates can be lower for qualified borrowers. However, the proportion of Americans using personal loans is at present lower than those using BNPL services. Furthermore, the two sources of funding could be able to be used for the same goals.
Within the past 12 months, around 60 million Americans (24 percent) took out at minimum one personal loan in comparison to 29% in the previous year .
In average, these borrowers were able to take out $5,046. The majority of borrowers took out $5,000 or more in that one-year period.
Time horizon: A way to choose your money source
Ideally, when you wish or need to buy something, you are able to make it happen with cash or a debit or credit card that you are able to pay in full prior to each due date. However, unexpected expenses and challenging financial times can arise, and sometimes the largest purchases can't be fit in a budget.
Though all of these sources will require you to pay the amount back in a certain time, thinking about how long you'll have to cover the cost will help you in selecting the best source.
Short-term funding
If you're in need of money quickly and only for a brief period, consider the following options. The cost associated with these -- including fees and interest can be high, so you'll need to plan for an immediate payoff and utilize them to meet your needs and not for wants.
Mobile cash advance apps are useful in the event of an emergency or in the absence of an emergency reserve. They can be used to cover a gap in your income or cover a utility bill that's due within a few days of your paycheck, for example. However, be aware that they could make it easier to continue borrowing.
Credit cards: Credit cards are an great for covering costs, as long as you pay off the entire balance before the due date. Don't do it and the interest costs can quickly accumulate.
Long-term financing
Debt consolidation and unexpected large expenses -- like a home appliance that quits or vehicle repairs may not require years to pay off and certainly not more than a few weeks.
0% APR credit card If you're eligible for credit cards that offer up to a year of free credit. They can be particularly useful for the transfer of high-interest credit card debt, or for unexpected large expenses. Be sure to pay the balance before the interest-free period expires, or else you'll be liable for the interest you accrued in that time, too.
Pay later, buy now The terms vary from BNPL company, though some may provide terms that last for a few months or years. A downside is that they don't report on-time payments to credit reporting agencies, so they'll not help you build your credit.
Financing sources with a longer-term term
Sources that allow you to pay off a loan or credit line over a longer period may require credit requirements which short-term alternatives don't. But, the advantage is the money doesn't "cost" you as much -- interest and fees are generally lower.
Personal loan: Personal loans might have a very high minimum requirement for approval, but they can be an excellent source of large amounts that are repaid over a longer period. If you can get them through traditional credit unions and banks, you may qualify for a lower rate in the event that you're an existing credit card holder.
401(k) loan: These loans are a way of borrowing against your nest egg, and in the event that there's a job loss and you can't repay the loan the loan may be rescinded and taxed as the result of a withdrawal. However, interest rates may be favorable and loan amounts generous, and they do not require a credit check.
The home equity line of credit, also known as cash-out refinances: Homeowners may use additional funding sources by tapping the equity in their home. This type of financing could offer low interest rates, however similar to mortgages, it can also put your home's value in jeopardy if you default.
"Emerging financing options such as BNPL as well as cash advances applications throw a wrench in the traditional collection of financing options" Millerbernd says. "The most important thing to do when borrowing money is to know what you'll pay back in advance."
METRODOLOGY

This online survey took place in the U.S. by The Harris Poll on behalf of NerdWallet beginning in August. 4 to 8, 2022 among 2,065 U.S. adults ages 18 and older. The accuracy of sampling in Harris polls online is determined by using a Bayesian credibility interval. In this case, the data from the sample is precise up to +/-- 2.8 percentage points using the 95% confidence level. For more information on the survey's methodology, including weighting variables and size of the subgroups, contact Alikay Wood at
Calculations to determine the number of Americans have used personal loans; buy now, pay later; as well as mobile cash advances apps Based on estimates of the population for 2021 from the U.S. census.
The survey question regarding financing sources in difficult economic times was phrased "Which of the following sources are your most likely sources to utilize to pay bills and cover other household expenses during tough economy (e.g. recession, job loss, unexpected costs) when you didn't have enough cash in your bank to cover these expenses? Please choose all of the ones that you can."
Disclaimer
NerdWallet does not make, either expressly or impliedly, all representations and warranties of any kind, including merchantability and fitness for a particular purpose or whether the information provided in the article is reliable, accurate or free of mistakes. The use or reliance you place on this information is at your own risk, and its accuracy and completeness are not guaranteed. The information in this article shouldn't be relied upon or linked with the future performance or performance of NerdWallet or any of its affiliates or subsidiaries. Any statements that do not reflect historically accurate are forward-looking statements that are subject to risks and uncertainties as indicated by words such as "believes," "expects," "estimates," "may," "will," "should" or "anticipates" or similar expressions. These forward-looking statements could significantly differ from NerdWallet's representation of data to analysts as well as its actual financial and operational results.










About Elizabeth Renter's job as a chief writer as well as data analyst for NerdWallet has been mentioned as a result of her work by The New York Times, The Washington Post, CNBC and elsewhere.







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