Buy now, pay later plans are the second-most used form of credit payment among U.S. consumers, according to a new NerdWallet survey.
It found that in the past 12 months, credit cards were among the most commonly used type of credit that, but 25% of Americans used buy now, pay later (BNPL), and 10% used a cash advance app.
According to the survey, younger generations and parents are among the groups more likely to make use of BNPL services; over one-third of parents of minor children have used BNPL in the past 12 months, compared with 20% of nonparents of minors.
In addition, 40% of Gen Z (ages 18-27) and 36% of millennials (ages 28-43) have used BNPL during that time, compared with just 20% of Gen X (ages 44-59) and 12% of baby boomers (ages 60-78).
The survey shows that 8% of Americans had to use BNPL to pay for necessities while the same share anticipates having to use BNPL for necessities in the coming 12 months, a sign that many Americans expect further financial restraints in the short term.
Speaking on the findings, NerdWallet credit cards expert Sara Rathner warned: “Because buy now, pay later services don’t require a credit check, the barrier to entry is low. This convenience can work against you, however, if you’re taking on more debt than you can realistically pay off.”
She added: “How we use credit says a lot about our overall household financial health. At one end of the spectrum, someone could be paying off their credit card balances each month and racking up rewards points to use on a vacation. At the other is someone signing up to buy now and pay later on their weekly groceries. Access to credit is useful in both of these scenarios, though the costs and benefits of these types of credit can vary dramatically.”
