NBC News reports that “buying now and paying later is still a popular way to splurge on airfare to Cabo. It’s an increasingly common way to buy groceries and lawn furniture, too.
“Consumers ages 35 and under comprise 53% of ‘buy now, pay later’ users but just 35% of traditional credit card holders, according to LexisNexis Risk Solutions. Many of those core ‘BNPL’ borrowers have grown so comfortable using the installment loans for just-out-of-reach luxuries that they’re putting more everyday purchases on them as well.”
The story goes on:
“The shift adds to signs that fast-growing BNPL services, which let users break up transactions into several payments with little or no interest, are becoming a routine tool in young adults’ wallets as they adapt to higher prices.
“Afterpay’s youngest users’ spending on many staples has surged by double and triple digits, with contact lenses soaring 465% from 2022 to 2023, garbage bags jumping 182% and first-aid antiseptics rising 98%. Their spending growth for lighter fluid, laptop parts and snoring and sleep apnea aids all surpassed 300%.
“Young borrowers are making similar moves on rival services, too. Benjamin Espinoza, 27, recently stocked his fridge using a discount promotion from Instacart and selected Klarna at checkout, using the BNPL provider to spread out his roughly $40 bill.”
And, the story says, “It isn’t just BNPL borrowers in their 20s and 30s making the shift toward essentials. Grocery purchases by shoppers of all ages have expanded their slice of online BNPL loans by 40% since this time last year, according to Adobe — a bigger jump than any other product category — while electronics’ share shrunk by 14%.”
KC’s View:
My first reaction to this was that it is an example of financial irresponsibility, but, interestingly, there seems to be an argument that in fact, for people feeling temporary financial stress, it is better that they use BNPL to facilitate everyday survival rather than take a vacation they can’t afford.
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