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The latest installment payment method, Buy Now, Pay Later (BNPL) is changing the way people shop. Widely available online, you usually only have to make the down payment at check-out with additional payments required and a due date clearly defined to you during the purchase process. Often, these payment plans don’t deal with interest charges or fees – as long as you pay on time.
If this combination of flexibility sounds appealing to you, you’re not alone. A new survey by Forbes Advisor shows that Americans are turning to buy now and pay later services to help fund purchases and a third of respondents now prefer BNPL to paying directly with their credit card.
Here’s what American attitudes and behavior look like today.
The majority of respondents are likely to use BNPL soon
Although buy now and pay later services have been around for a while, a November 2021 YouGov survey for Forbes Advisor last year concluded that 67% of respondents did not use them. Now, though, that appears to be changing. According to our most recent survey, 59% of respondents are somewhat or very likely to use the Buy Now Pay Later service within the next six months. Another 15% of respondents did not rule it out and chose that they are neither likely nor unlikely to use the service.
This shift in attitudes and behavior can be explained by the intense publicity of choice. Respondents specified that they saw advertisements on various forms of social media, including Facebook, Instagram, and TikTok. Buy now and pay later services were also seen in public online ads, with 43% of respondents confirming that they had seen these ads and 42% choosing to have seen BNPL options displayed during check-out.
Overall, these ads were effective in building awareness, even if not all respondents wanted to use the service. Only 13% of respondents chose that they were not familiar with this payment option. Those who use these services tend to be returning users with 52% of respondents using the buy now and pay later options once a month or more. Young people in particular use BNPL several times a month.
BUY NOW, PAY LATER NOT ONLY FOR BIG TICKET ITEMS
The most popular types of BNPL purchases, according to the survey, were clothing, shoes, accessories, and handbags. While these certainly have the potential to be pricey purchases, they are not always the case. In fact, 49% of respondents chose to use BNPL to purchase mid-range clothing, shoes, and accessories.
Another popular buy section of Buy Now, Pay Later was in home décor, home improvement or hardware buying. Over 40% of survey respondents used BNPL for those types of purchases.
Although respondents used BNPL options for more expensive purchases, including electronics or jewelry, they chose not to use this type of travel installment plan. Only 9% of respondents used BNPL to purchase travel, despite its often high price tag and tendency to advertise it online and in social media, the same places where BNPL marketing is common.
In general, small to mid-range purchases were the most popular price tags according to the participants. Twenty-seven percent of respondents have spent between $1 and $100 on BNPL purchases in the past six months and another 44% have spent between $101 and $500. Although the buy now, pay later option provided an option to fund larger purchases, it was a less popular option among respondents.
Related: Best 0% APR Credit Cards From Forbes Advisor
The ability to fund fees is a big draw
Some people choose BNPL plans to try out a pre-paid product in full. If they end up sending it back, they don’t have to float the entire cost. For 57% of respondents, this is a factor in choosing BNPL services.
Other motives for buying through BNPL services are more similar to traditional financing. The ability to break purchases into manageable payments is a factor for 63% of respondents, but there is a notable difference between BNPL, credit cards and other forms of financing. With BNPL, you know the full payment amount up front and you don’t have to worry about interest charges. This is a factor in choosing BNPL for 61% of respondents.
In addition, 45% of respondents said they chose BNPL because they expected to get more money later, and 34% of respondents said that BNPL allows them to make purchases that would otherwise be within their budget.
Unfortunately, these reasons can lead to the same types of excessive extensions as other forms of financing. According to the survey, 56% of respondents have missed one of their intended BNPL payments, which could put them in a bind for fees and interest charges and possibly affect their credit. This is a huge jump compared to the self-reported payment behavior in last year’s survey when only 27% of respondents admitted to missing a payment.
For someone who needs a long time to cover a purchase, applying for an introductory 0% APR credit card may provide more time to pay before interest begins to accrue.
Find the Best 0% APR Credit Cards for 2022
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Like any type of financing, Buy Now and Pay Later give customers more flexibility in how and when they choose to pay. It can be a convenient option for customers with no interest fees and more transparency than credit cards that don’t count payments until the statement is closed. As always, using financing as a strategic resource can be a smart move but sticking to an agreed-upon payment plan is key.
methodology
This online survey of 2,000 adults in the United States was conducted by Forbes Advisor and conducted by market research firm OnePoll, according to the Market Research Association’s Code of Conduct. Data collected April 22-25, 2022. This survey was overseen by the OnePoll research team, which is a member of the MRS and has a joint membership with the American Association for Public Opinion Research (AAPOR). For a complete survey methodology, including geographic and demographic sample sizes, contact [email protected].
