A rising number of Americans are utilizing buy now, pay later (BNPL) loans for essentials like groceries, with recent Lending Tree data indicating that 25% of users have turned to these loans for food purchases, up from 14% in 2022. Approximately 50% of consumers aged 18 to 79 reported using BNPL services in a survey conducted in early April. Concurrently, 41% of respondents admitted to making late payments on BNPL loans in the past year, a jump from 34% the previous year. Lending Tree’s chief consumer finance analyst, Matt Schulz, noted that many late payments were by a week or less, highlighting the growing financial strain many face due to persistent inflation, high interest rates, and economic uncertainties.
Schulz suggested that the trend of increasing BNPL usage might signify consumers struggling financially rather than being an immediate recession indicator, predicting further economic challenges in the short term. While BNPL loans offer a popular interest-free alternative to credit cards, consumers risk accumulating high fees for late payments and managing multiple loans. The survey found that 60% of BNPL users had multiple loans, with almost a quarter juggling three or more at once. Schulz advised caution in using BNPL as it can help bridge financial gaps, but mismanagement poses significant risks.
Additionally, trends like the 60% of Coachella attendees financing tickets through BNPL loans and DoorDash’s acceptance of BNPL for food delivery underscore the ongoing debate about consumer behavior under economic strain. Major companies have begun reporting decreased demand, suggesting a potential shift in consumer resilience despite a strong job market and wage growth in recent years.
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