Nearly 78M Americans Utilized Buy Now or Pay Later in Past Year

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More than 78 million Americans Used Buy Now, Pay Later and Pay Later in the previous year.
NERDWALLET 2022 PERSONAL LOANS REPORT
Written by Elizabeth Renter Senior Writer/Spokesperson | Analysis of data, Personal Finance Economic analysis Elizabeth Renter spends her time looking for consumer-oriented insights from datasets and crunching the figures for everything personal financial. The work she has done was mentioned as a result by The New York Times, The Washington Post, the "Today" show, CNBC and elsewhere. Before being a part of NerdWallet as of the year 2014, she was freelance journalist. When she's not engaging in math and words, Elizabeth enjoys traveling, powerlifting and restoring her Victorian home. She lives at Clay Center, Kansas.





October 11 Oct 11, 2022


Editor: Kim Lowe Lead Assigning Editor Consumer loans Kim Lowe leads the personal loans editorial team. Kim Lowe joined NerdWallet following 15 years of managing the content on MSN.com, including food, health and travel. Kim began her career as a journalist for publications that covered the mortgage, supermarket and restaurant industries. Kim received her 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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When your car fails to start and your bill for utilities skyrockets it is easy to find space in your budget to cover these expenses. If the money doesn't exist, you may turn to alternative, and sometimes more expensive options.
Although 50% of Americans would most likely use credit cards to pay for bills and pay for other household expenses in tough economic times, if they didn't have cash in their wallets, others would turn to newer, nontraditional sources as per an NerdWallet study of 265 U.S. adults conducted Aug. 4-8 on the web by Harris Poll.
According to the survey 14% of respondents would most likely use "buy now buy later" services and 11% would use mobile cash advance applications to pay off bills and other household expenses during tough economic times.
"Buy now, pay later isn't only for clothes and shoes. Customers use these services to cover necessities like food, gas and health care costs," says Annie Millerbernd the head of NerdWallet's personal loans. "They seem like an easy option to cover the essentials if you don't have cash, but problems occur when you can't actually make the payment in time."
Within the past year millions of Americans have made the switch to these financial tools that are relatively new and the smallest of adults are often leading the charge, according to the survey.
Editor's note: All through the report, when discussing the sources of funding Americans will most likely utilize during tough economic times We are discussing the types of sources they'd likely utilize to pay for bills and other household expenses in the event they didn't have money available to cover the expenses.
The key results
Credit cards are a mainstay however, buying now and pay later is also an option in difficult economic times. Half of Americans (50 percent) are likely to make use of credit cards to pay payments and other household expenses in tough economic times, in the event that they did not have cash available. Some would opt for newer funding types 14% are more likely to utilize buy now or pay later, while 11% would use cash advance apps on mobile devices to pay charges and other expenses during such economic times, according to the survey.

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

Mobile cash advance apps offer millions of Americans money fast. Around 49.2 million Americans (19%) have used apps for cash advances on mobile devices in the last twelve months. Like BNPL the apps are particularly popular among younger generations: 38% from Generation Z (ages 18-25) and 39 percent of young people (ages 26-41) have used them over the past year, while 11 percent of the Generation X (ages 42 to 57) and 2% of baby boomers (ages between 58-76) According to the survey.
More Americans use BNPL over personal loans. In the past twelve months 24 percent of Americans which is 62 million took out at minimum one personal loan, borrowing $5,046, on average, during that period The survey revealed.

Where do Americans turn in difficult times
50% of Americans (50%) would be most likely to utilize 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, such as a recession, job loss , or unexpected costs. The credit card was the second most commonly cited financial source, according to the study.
The majority, or 43% of Americans will use their savings for emergencies to pay such expenses during those times, the survey found. Setting aside a fund like this takes some time and your budget to make it happen. Understandably, not everyone has these savings.
To see a graph of how all generations responded to the survey, .
"There are many borrowing options for people when they are in a tight spot, however credit cards as well as personal loans may have extremely strict borrowing requirements," Millerbernd says. "Buy now, pay later and cash advances are easier to obtain, but can make people overspend themselves."
Buy nowand pay later is once again wildly popular
About 77.7 millions Americans have utilized the internet in the last 12 months, according to the study. It's 30% of Americans less than 37% when we asked in September 2021.
They've also used it often around six times during the past twelve months, on average.
Pay later and buy now This is an installment loan that is made at the time of purchase, be it at the cash register or on the internet. This type of service can enable you to spend more than you normally would since you're paying only part of your bill at checkout, and they are accompanied by possibly significant charges, particularly when you don't make a payment. Because loans typically don't require a hard credit check, they could be appealing to those with low credit scores and otherwise aren't eligible for other forms 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 study. This is in contrast to 25 percent from Gen X and 14% of baby boomers.
49.2M turn to mobile cash advance apps over the past year
A total of 49.2 million Americans (19%) have used a within the past 12 months, according to the survey.
Mobile cash advance applications often referred to as paycheck advance apps, essentially loan the user money from your future pay check. These loans have limits, generally between a few hundred dollars, and a lot of them come with subscription fees or other fees built in. Although they can be a source of fast cash when expenses arise and you aren't able to tap other sources of cash, they can be expensive considering the amount borrowed.
Like BNPL, mobile cash advances are more prevalent among younger generations. 38 percent of Gen Z and 39% of young people, 11 percent of Gen X, and 2% of baby boomers have used these apps within the past year.
Furthermore they will be more frequently used by people who earn less -- 26% of those with a household income below $50 and 22 percent of people who have households earning between $50,000 and $74,999 have utilized these apps in the past twelve months, as opposed to 15% of those who have household incomes of $100,000 or more.
Personal loans are a funding source for one-quarter of Americans
The personal loans are a reliable source of money to pay off debts or to purchase new products. The repayments are set and the interest rates may be lower for qualified borrowers. However, the percentage of Americans who use personal loans is at present lower than the percentage of borrowers who utilize BNPL services. The two funding sources could, in some cases, be utilized for similar purposes.
Within the past 12 months, around 62.5 million Americans (24 percent) are taking out at minimum one personal loan which is a slight decrease from 29 .
On average, these borrowers received $5,046. A full 28% of borrowers took out $5,000 or more during that one-year period.
Time horizon: One way to select your money source
Ideally, when you wish or require to purchase something, you can make it happen with cash or a debit or credit card that you can pay in full before each due date. However, unexpected expenses and challenging financial times may arise often, and the largest purchases can't be fit within a budget.
Although all of these sources require you to pay the amount back in a certain time taking into consideration the time frame you'll need to pay off the expense is an excellent starting point in selecting the best source.
Short-term financing
If you're in need of money quickly and only for a brief period, consider the following options. The expenses related to these options -- which include interest and/or fees -- can be high, so you'll have to make an immediate payoff and utilize them to meet your needs and not for desires.
Cash advance mobile apps are useful in the event in an emergency, or in the absence of an emergency fund. They can be used to bridge an income gap or cover a utility bill that's due a few days before your paycheck, for example. Be aware that they could make it easier to keep borrowing.
Credit cards: Credit cards are great for covering costs, so long as you are able to pay the full balance by the monthly due date. Don't do it, and interest charges will quickly mount up.
Short-term and medium-term financing
The consolidation of debts and sudden expenses , such as the home appliance that fails or vehicle repairs could not take many years to pay however, it will certainly take longer than a couple of weeks.
Credit cards with 0% APR If you're eligible, some credit cards offer up to a year of free of interest. They can be especially useful for the transfer of high-interest credit card debt or to cover unexpected costs. Be sure to pay the outstanding balance before the interest-free time is over, or you'll be charged the interest you accrued in that time as well.
Pay now, buy later The terms vary from BNPL company, though some may provide terms that last for a few months or years. One downside: Most don't report on-time payments to credit reporting agencies, so they're not helping improve your credit score.
Financing sources with a longer-term term
Options that let you pay off the loan or credit line over a longer time frame may be able to meet credit criteria that short-term options don't. However, one benefit is that the loan doesn't "cost" you the same amount -- fees and interest are typically lower.
Personal loan Personal loans may have a high minimum requirement for approval, but they could be an important source of funds that are repaid over a longer period. If you can get them through traditional banks and credit unions they may allow you to get an interest rate that is lower in the event that you're an existing credit card owner.
401(k) loan: These loans are a way of borrowing against your nest egg, and in the event that the job you're working in is terminated and you aren't able to repay it, your loan could be subject to penalties and taxed as an income withdrawal. However, the interest rates could be attractive and loan amounts are generous, and do not require a credit screening.
Home equity line of credit or cash-out refinances: Homeowners may utilize additional funding sources through tapping into the equity of their home. This kind of loan can be low-interest, but like a mortgage, it can also put your home's value in danger should you default.
"Emerging financing options like BNPL and cash advance applications have thrown a wrench into the standard collection of financing options" Millerbernd declares. "The crucial factor to successfully borrowing money is to know the method of repaying it ahead of time."
METRODOLOGY

This survey online took place in the U.S. by The Harris Poll on behalf of NerdWallet from Aug. 4 to 8, 2022 among 2,065 U.S. adults ages 18 and older. The sampling precision of Harris polls online is determined by using a Bayesian credible interval. For this study, the accuracy of the sample data is up to +/-+/- 2.8 percentage points using 95% confidence levels. For complete survey methodology, including weighting variables and subgroup sample sizes, contact Alikay Wood at
Calculations to determine the number of Americans have used personal loans; buy nowand pay later; or mobile cash advance applications based on 2021 population estimates of census data from the U.S. census.
The survey question regarding the sources of funding used during tough economic times was phrased "Which among the above are your most likely sources to employ to pay for bills or other household expenses during difficult economy (e.g. recession or job loss, sudden expense) 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 disclaims, expressly and implicitly, any warranties whatsoever, which includes those of quality and suitability for a particular purpose , or whether the information contained in the article is reliable, accurate or free of mistakes. The use or reliance you place on the information provided is at your own risk, and its completeness and accuracy are not warranted. The information in this article should not be relied upon or associated with the performance in the future or performance of NerdWallet nor any of its affiliates or subsidiaries. Statements that are not historically accurate are forward-looking statements that are subject to risks and uncertainties. They are expressed in terms such as "believes," "expects," "estimates," "may," "will," "should" or "anticipates" or similar expressions. These forward-looking statements may materially differ from NerdWallet's presentation of information to analysts and its actual financial and operational results.










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







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