Nearly 78M Americans used Buy Now and Pay Later and Pay Later in the previous year.

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Nearly 78M Americans Used Buy Now, Pay Later and Pay Later in the previous year.
NERDWALLET 2022 PERSONAL LOANS REPORT
By Elizabeth Renter Senior Writer/Spokesperson | Data analysis, Personal finance, Economic analysis Elizabeth Renter spends her time hunting for consumer takeaways in datasets and crunching numbers for all things personal finance. She has had her work mentioned in The New York Times, The Washington Post, the "Today" show, CNBC and elsewhere. In the past, prior to her becoming a member of NerdWallet in 2014, she worked as an independent journalist. When she isn't playing with words and numbers, Elizabeth enjoys traveling, lifting weights and restoring her Victorian home. Her home is within 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. Kim Lowe joined NerdWallet following 15 years of of managing content for MSN.com that covered food, health, and travel. Kim began her career as a journalist for publications covering mortgages food, restaurant and supermarket industries. Kim obtained an undergraduate degree in journalism at 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 and your bill for utilities is soaring, you find room in your budget to cover these expenses. When the cash does not come in, you can turn to alternative, and sometimes more costly alternatives.
Although 50% of Americans are likely to use credit cards in order to settle bills and cover other household expenses during tough economic times, if they did not have cash in their wallets, others would turn to more innovative, alternative sources, according to a NerdWallet research of 2,065 U.S. adults conducted Aug. 4-8 on the web by Harris Poll.
According to the survey, 14% are likely to use "buy now, and pay later" services, and 11% would turn to mobile cash advance apps to pay bills and cover other household expenses in tough economic times.
"Buy now, pay later isn't only for clothes and shoes. People use these services for necessities like food, gas and health-related expenses," says Annie Millerbernd the NerdWallet's expert on personal loans. "They appear to be an easy option to cover the essentials if you're short on money, but the problem arises when you're unable to pay later."
Within the past year many thousands of Americans have turned to these relatively new financial tools, and the youngest adults are often leading the charge in the study.
Editor's note: All through the report, when we discuss the sources of funding Americans are most likely to use in tough economic times in the future, we're talking about the sources they'd most likely turn to to pay their bills and cover other household expenses in the event they did not have enough cash available to cover the expenses.
Key conclusions
Credit cards are an essential part of our lives however, buying now and pay later can also be a source during trying financial times. Half of Americans (50 percent) are most likely to make use of credit cards for payments and other household expenses in times of economic hardship when they don't have cash in their wallets. Some would opt for newer funding types 14% are most likely to purchase now or pay later, while 11% would utilize mobile cash advance apps for bills and expenses during such times, according to the survey.

Millions have used buy now and pay later over the last year. Around 78 million Americans (30%) have used buy now, pay later in the last 12 months, the survey revealed. Of them, they've utilized it six times, in average.

Apps for mobile cash advances can provide millions of Americans cash fast. Around 49.2 million Americans (19 percent) have used mobile cash advance apps in the past twelve months. Similar to BNPL, these apps are particularly popular among younger generations: 38% of Generation Z (ages between 18 and 25) and 39% of millennials (ages 26, 41,) have used them over the last year, as opposed to 11 percent from the Generation X (ages 42 to 57) and 2% of baby boomers (ages 58-76) as per the study.
More Americans are using BNPL more than personal loans. In the past twelve months, 24 percent of Americans (62 million) took out at least one personal loan, borrowing $5,046, on average, during that period according to the study.

Where Americans are able to turn when they face tough times
50% of Americans (50 percent) are most likely to make use of credit cards for paying bills as well as other expenses for the household if they didn't have cash to cover them in times of economic hardship, such as a recession, job loss or unexpected expenses. Credit cards were the most commonly cited financial source, according to the study.
A smaller percentage, just 43% of Americans will use their emergency savings account to cover these expenses in those instances according to the study. The process of putting aside funds such as this requires time and space in your budget to make it occur. Understandably, not everyone has these savings.
For a chart illustrating how different generations responded to the survey, .
"There are many borrowing options when money is limited, but credit cards and personal loans can have tough borrowing conditions," Millerbernd says. "Buy now, pay later and cash advances are much simpler to get, but they could lead people to overextend themselves."
Buy now, pay later is becoming a hugely popular choice
About 77.7 million Americans have utilized the internet in the last 12 months, according to the study. It's 30 percent of Americans, down slightly from 37% in the survey we conducted in September 2021.
It's been used frequently around six times over the past 12 months, which is about average.
Pay later and buy now is an installment loan made at the point of purchase, be it the cash register or online. This type of service can allow you to spend more than you typically will because you're only paying part of the bill at the time of purchase, and they come with the risk of potentially significant fees, particularly in the event of a late payment. Because the loans generally don't require a hard credit check, they may appeal to people who have poor credit scores and would not be eligible for other kinds of credit.
Half of millennials (50%) and 44 percent from Gen Z have used BNPL during the past twelve months, as per the survey. This is in contrast to 25% from Gen X and 14% of baby boomers.
49.2M use mobile cash advance apps over the past year
A total of 49.2 million Americans (19 percent) have used a within the last 12 months, according to the survey.
Apps for mobile cash advances often referred to as paycheck advance apps, basically loan your money out of your future pay check. These loans are subject to limits, typically between one hundred dollars and some of them include subscription or other fees built in. While they could provide quick cash in the event of an emergency and you can't tap other sources, they can be costly if you consider the amount of money you're borrowing.
Like BNPL and mobile cash advances, mobile cash advance use is more frequent among younger generations. 38% of Gen Z, three-quarters of the millennials, 11 percent of Gen X, and the baby boomers, 2% have used these apps in the past year.
Additionally they will be more frequently utilized by people who earn less -- 26% of those who have a household income of less than $50,000 and 22% who have a household income of $50,000-$74,999 have used them in the past twelve months, as opposed to 15% of people with households earning $100,000 or more.
Personal loans are a funding source to one-quarter of Americans
Individual loans are a reliable source of cash to consolidate debt or to purchase new products. The payments are fixed and interest rates can be low for well-qualified borrowers. However, the percentage of Americans taking out personal loans is at present lower than the percentage of borrowers who utilize BNPL services. The two funding sources could at times be utilized for similar purposes.
Over the last twelve months, 60 million Americans (24 percent) are taking out at least one personal loan, down slightly from 29% in the previous year .
On average, they received $5,046. The majority of the borrowers borrowed $5,000 or more during that one-year period.
Time horizon: A way to select your money source
Ideally, when you wish or need to purchase something, you are able to make it happen with cash or a debit or a credit card you are able to pay in full prior to each due date. But unexpected expenses and trying financial times can arise, and sometimes large purchases don't fit neatly in a budget.
Although all of these sources require you to pay them back over time Consider how long you'll have to cover the cost is an excellent starting point in choosing the right source.
Short-term financing
If you require money fast but only for a limited time frame, you can consider these alternatives. The cost associated with these (including fees and interest could be very high, so you'll have to make the quick payment and use them for needs rather than desires.
Mobile cash advance apps can be used in the event of an emergency or in the absence of an emergency account. They can be used to fill in a gap in income or cover the cost of a utility bill due a few days before your next paycheck, for example. However, be aware that they could make it easier to keep borrowing.
Credit cards: Credit cards are an great for covering expenses, provided that you pay the amount by the monthly due date. Don't do it, and interest charges will quickly mount up.
Long-term financing
Consolidation of debt and unexpected expenses , such as a home appliance that quits or vehicle repairs may not require years to pay off and certainly not longer than a couple of weeks.
Credit card with 0% APR: If you qualify, some credit cards offer one year or more of free of interest. They can be particularly useful for the transfer of high-interest credit card debt or for unexpected large expenses. Make sure you pay the balance before the interest-free period expires, or else you'll be liable for the interest you accrued in that time as well.
Pay now, buy later Terms differ by BNPL company, but certain companies may offer terms that run for several months or even years. The downside is that most do not report on-time payments to credit bureaus, so they're not helping build your credit.
Sources of funding for the longer 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. One advantage is that it doesn't "cost" you the same amount -- interest and fees are generally lower.
Personal loan Personal loans might have a very high threshold for eligibility, however they can be a source of significant amounts which are paid back over a long period. If they are offered through traditional credit unions or banks You may be eligible for an interest rate that is lower if you're an existing account holders.
401(k) loan: These loans can be a risky investment because you're borrowing against your nest egg and in the event that there's a job loss and you you aren't able to repay the loan the loan may be rescinded and taxed as a withdrawal. However, interest rates can be attractive and loan amounts are generous, and they do not require a credit screening.
Line of Credit for home equity, also known as cash-out refinance: Homeowners can use additional funding sources by tapping the equity in their home. This type of financing could be low-interest, but similar to mortgages, it could also put your home in danger should you default.
"Emerging financing options like BNPL or cash advance applications are throwing a wrench into the standard range of financing options," Millerbernd says. "The crucial factor to successfully borrowing money is to know what you'll pay back prior to the due date."
METRODOLOGY

The online survey took place in the U.S. by The Harris Poll on behalf of NerdWallet beginning in August. 4-8, 2022 with 265 U.S. adults ages 18 and over. The sampling precision of Harris online polls is assessed using a Bayesian reliable interval. This study shows that the accuracy of the sample data is by +/- 2.8 percentage points, using 95% confidence levels. To learn more about the methodology of the survey including weighting variables as well as subgroup sample sizes, contact Alikay Wood at
Calculations that determine how many Americans have utilized personal loans purchase today, pay later or mobile cash advance apps basing their calculations on the 2021 population estimates of Census of the U.S. census.
The survey question regarding the sources of funding used during tough economic times was formulated as "Which of the following are you most likely to use to pay bills and cover other household expenses during difficult economic times (e.g. recession or job loss, unanticipated costs) should you didn't have enough cash available to cover the expenses? Select all that are applicable."
Disclaimer
NerdWallet does not make, either expressly or implicitly, any warranties whatsoever, which includes those of merchantability and fitness for a specific purpose or whether the information contained in the article is accurate, reliable or free of mistakes. The use or reliance you place on the information provided is at your own risk, as well as its completeness and accuracy are not warranted. The contents in this article should not be relied upon or linked with the performance in the future that of NerdWallet as well as any affiliates or subsidiaries. Any statements that do not reflect historically accurate are forward-looking statements that involve 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 materially differ from NerdWallet's presentation of information to analysts and its actual operational and financial results.










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







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