Half of Americans Use “Buy Now, Pay Later” Plans, Reveals Gallup Survey

Around 50% of Americans have delved into the world of “buy now, pay later” (BNPL) installment plans for their online shopping needs. This includes 10% who are regular users of these payment options, as per the findings of a recent Gallup survey.

Of the total, 17% and 24% of Americans have reportedly used BNPL occasionally or rarely for their online purchases, respectively. Interestingly, the survey reveals a higher inclination towards BNPL services among lower-income Americans.

Those who struggle with their financial stability were nearly three times more likely to opt for installment plans for their online purchases. The same pattern was noticed among Americans who expressed concerns about making minimum credit card payments.

Despite the growing trend, a Bankrate survey conducted last year highlighted the potential risks associated with BNPL services. Nearly half of BNPL users encountered problems such as overspending, missed payments, or regrets over purchases.

Bankrate‘s Principal Analyst, Ted Rossman, remarked that while BNPL is often marketed as a softer alternative to credit cards, it’s not devoid of risks.

The popularity of BNPL services has surged in recent years, with major credit card issuers such as Chase, Citi, and American Express now providing installment-payment features. Dedicated BNPL providers like Affirm, Afterpay, and Klarna have also made significant strides in this space.

Typically, BNPL options are integrated at the point of sale on e-commerce websites. However, these providers now offer physical cards that can be used in physical stores as well.

The most common BNPL offering consists of four interest-free payments spread over six weeks. However, this industry is broadening its range to accommodate larger purchases with repayment periods extending up to two years.

Buyers should be aware that longer-term BNPL plans often charge interest rates comparable to credit cards. Rossman advises consumers to read the fine print carefully before committing to one of these long-term, interest-bearing BNPL deals.

According to Rossman, BNPL is best suited for occasional, high-value purchases rather than routine spending. He cautioned against impulse buying and stated that dividing purchases into smaller payments may make costly items seem more affordable than they actually are.

Nevertheless, BNPL can be a lifeline for individuals in need of specific items but lack immediate funds. However, Rossman suggests that using a credit card and paying it off immediately, if possible, is often a better option, offering better rewards and buyer protection.