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Nearly 78M Americans Used Buy Now, Pay Later in Past Year

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Nearly 78M Americans Used Buy Now, Pay Later and Pay Later in the previous year.
NERDWALLET 2022 PERSONAL LOANS REPORT
By Elizabeth Renter Senior Writer/Spokesperson | Analysis of data, Personal Finance Economic analysis Elizabeth Renter spends her time hunting for consumer takeaways from datasets and crunching the numbers on all matters of personal financial. Her work has been featured by The New York Times, The Washington Post, the "Today" show, CNBC and elsewhere. In the past, prior to her being a part of NerdWallet in 2014, she was freelance journalist. When not playing with words and numbers, Elizabeth enjoys traveling, lifting weights and restoring the beauty of her Victorian home. Her home is in Clay Center, Kansas.





Oct 11, 2022


Edited by Kim Lowe Lead Assigning Editor Consumer loans Kim Lowe leads the personal loans editorial team. Kim Lowe was hired by NerdWallet following 15 years of of managing content for MSN.com which included food, health and travel. Kim began her career as a writer for publications covering mortgages food, restaurant and supermarket industries. Kim received an undergraduate degree in journalism from the University of Iowa and a Master of Business Administration from the University of Washington.







A majority of the products featured here are from our partners, who we pay. This affects the products we write about and the location and manner in which the product appears on a page. But, it doesn't influence our evaluations. Our opinions are entirely our own. Here's a list of and .



When your car fails to start or the cost of your utilities is soaring, you find room in your budget to pay for these costs. When the cash does not come in, you can turn to other, sometimes more costly options.
While 50% of Americans will likely utilize credit cards in order to settle bills and cover other household expenses during difficult economic times, if they didn't have cash available Some would resort to newer, nontraditional sources, according to an NerdWallet study of 265 U.S. adults conducted Aug. 4-8 online by The Harris Poll.
According to the survey 14% of respondents are likely to use "buy now and pay later" services and 11% would turn to mobile cash advance applications to pay for bills or other household expenses during difficult economic times.
"Buy now and pay later" isn't just for clothing and shoes. People use these services for needs like groceries, gas and health-related costs," says Annie Millerbernd, NerdWallet's authority on personal loans. "They appear to be an easy way to cover essentials when you're not able to pay cash, but problems occur when you aren't able to pay later."
Over the past year hundreds of millions Americans have made the switch to these financial tools that are relatively new and the smallest of adults are often leading the charge in the study.
Editor's note: In the report, when discussing what funding sources Americans are most likely to use in tough economic times We are referring to sources they'd most likely use to pay bills and other household expenses in the event they did not have enough cash on hand to cover them.
Key findings
Credit cards are an essential part of our lives but buying now and pay later is also a source during trying financial times. Half of Americans (50 percent) are most likely to use credit cards to pay for charges and other household expenditures in tough economic times, when they don't have cash on hand. Some might opt for more modern methods of funding 14% are more likely to utilize buy now or pay later options, and 11% would use cash advance mobile apps to pay bills and expenses during such times, according to the study.

Many have used buy-now and pay later over the past year. Around 78 % of Americans (30 percent) have used the buy now and pay later services in the last 12 months, the survey revealed. Of them, they've utilized it six times, in average.

Mobile cash advance apps offer millions of Americans cash fast. About 49.2 million Americans (19%) have used mobile cash advance apps in the last 12 months. Similar to BNPL and BNPL, these apps are most popular among younger generations: 38 percent from Generation Z (ages 18-25) and 39% of the millennials (ages between 26 and 41) have utilized them in the last year, as opposed to 11% of the Generation X (ages between 42 and 57) and 2% of baby boomers (ages between 58 and 76) According to the survey.
More Americans are using BNPL over personal loans. Over the last 12 months 24 percent of Americans, or 62 million took out at the very least one personal loan, borrowing $5,046, or more in that time, the survey found.

Where Americans are able to turn when they face difficult times
The majority of Americans (50%) would be most likely to use credit cards for bills and other household expenses if they didn't have enough cash on hand to pay for them in times of economic hardship, like a recession job loss or unexpected costs. The credit card was the second most often mentioned financial source according to the study.
Fewer, 43% of Americans are likely to use their emergency savings to cover the costs during these times The survey revealed. The process of putting aside funds like this takes time and enough room in your budget to allow it to happen. It is true that not all people have the funds to make such savings.
For a chart illustrating how all generations responded to the questionnaire, .
"There are plenty of borrowing options for people when they are limited, but credit cards as well as personal loans may have extremely strict borrowing conditions," Millerbernd says. "Buy now or pay later, and cash advances are much easier to qualify for but could cause people to overextend themselves."
Pay later, buy now is once again wildly popular
Around 77.7 million Americans have utilized the internet in the past 12 months, according to the survey. The figure is 30% of Americans which is a slight decrease from 37% in the survey we conducted in September of 2021.
It's been used frequently approximately six times during the past twelve months, on average.
Pay later, buy now This is an installment loan that is made at the time of purchase, be it the cash register or online. These types of services allow you to spend more than you typically would since you're paying only part of your bill at checkout, and they come with the risk of possibly significant charges, particularly in the event of a late payment. Because loans typically don't require a hard credit check, they could appeal to people who have low credit scores and otherwise wouldn't qualify for other types of credit.
Half of Gen Z and millennials (50 percent) and 44% of Gen Z have used BNPL during the past twelve months, as per the survey. This compares to 25 percent from Gen X and 14% of baby boomers.
49.2M use cash advance mobile apps in the past year
Around 49.2 million Americans (19%) have used a smartphone in the past 12 months, according to the study.
Mobile cash advance applications commonly referred to as pay advance applications, basically loan the user money from an upcoming pay check. These loans have limits, generally between several hundred dollars and some of them include fees for subscriptions or other charges that are included. Although they can provide quick cash when you need it and you aren't able to tap other sources, they could be costly if you consider the amount borrowed.
As with BNPL Mobile cash advance usage is more common with younger generations: 38% of Gen Z and 39% of young people 11 percent of Gen X and 2% of baby boomers have utilized these apps over the last year.
Furthermore, these apps tend to be utilized by people who earn less -26% of those who have a household income of less than $50,000 and 22% with a household income of $50,000-$74,999 have utilized them over the last twelve months, as opposed to 15% of those with household incomes of 100,000 or greater.
Personal loans are a source of financing that accounts for one quarter of Americans
The personal loans are a long-standing source of cash to consolidate debt or purchasing new items. They are a fixed-rate loan and interest rates can be lower for qualified borrowers. However, the percentage of Americans using 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 goals.
Within the past 12 months, around 62.5 million Americans (24%) are taking out at least one personal loan, down slightly from 29% in the previous year .
On average, they were able to take out $5,046. An impressive 28% of borrowers took out $5,000 or more over the one-year timeframe.
Time horizon: One way to select your money source
Ideally, when you wish or require to purchase something, you can do so outright with available cash or a debit card, or credit card. You can pay in full before each due date. But unexpected expenses and trying financial times can arise, and sometimes the largest purchases can't be fit within a budget.
Though all of these sources require you to pay them back at some point Consider how long you'll have to cover the cost is an excellent starting point in choosing the right source.
Short-term funding
If you require money fast and only for a brief time frame, you can consider these options. The expenses that come with them (including interest and/or fees -- are high, which is why you'll have to make an immediate payoff and make use of them for necessities rather than desires.
Mobile cash advance applications: Use in case of an emergency, even in absence of an emergency account. They can be used to fill in a gap in income or to pay a utility bill that's due within a few days of your pay check, for instance. Be aware that they can make it easy to borrow more money.
Credit cards: Credit cards are an the best way to pay for expenses, provided that you are able to pay the amount by the monthly due date. Fail to do this and the interest fees will quickly mount up.
Long-term financing
The consolidation of debts and sudden expenses , such as the home appliance that fails or vehicle repairs may not require years to pay off, but certainly longer than a couple of weeks.
0% APR credit card If you're eligible, some credit cards offer a year or more of free credit. They can be particularly useful to transfer high-interest credit card debt, or for unexpected large expenses. Be sure to pay off the balance before the interest-free period ends, or you'll owe the interest that accrued during that period as well.
Buy now, pay later: Terms vary by BNPL company, though some may provide terms that last for a few months or years. The downside is that most do not report on-time payments to credit reporting agencies, so they'll not help you improve your credit score.
Financing sources with a longer-term term
Options that let you pay off the loan or line of credit over a longer period may require credit requirements that short-term options don't. One advantage is the money won't "cost" you as much , since the interest and charges are usually lower.
Personal loan Personal loans could have a higher bar for qualification, but they could be a source of significant amounts which are paid back over a long period. If you can get them through traditional banks and credit unions, you may qualify for an interest rate that is lower if you're an existing account holders.
401(k) loan: These loans are a way of borrowing against your nest egg, and in the event the job you're working in is terminated and you aren't able to repay the loan, your loan could be penalized and taxed as an income withdrawal. However, interest rates may be advantageous and loan amounts can be generous and they do not require a credit screening.
Home equity line of credit or cash-out refinance: Homeowners can make use of additional sources of funding through tapping into the equity of their homes. This type of financing could be low-interest, but as with mortgages, it can also put your home's value in jeopardy if you default.
"Emerging financing options like BNPL or cash advance apps are throwing a wrench into the standard set of financing options," Millerbernd states. "The crucial factor to successfully borrowing money is to know what you'll pay back ahead of time."
METRODOLOGY

This survey online was conducted in the U.S. by The Harris Poll on behalf of NerdWallet beginning in August. 4-8, 2022, among 2,065 U.S. adults ages 18 and older. The precision of sampling of Harris polls online is determined using a Bayesian reliable interval. For this study, the sample data is accurate by +/- 2.8 percentage points, using a 95% confidence level. To learn more about the methodology of the survey, including weighting variables and size of the subgroups, contact Alikay Wood at
Calculations determining how many Americans have utilized personal loans Buy now, pay later; and mobile cash advance apps Based on estimates of the population for 2021 taken from census data from the U.S. census.
The survey question about the sources of funding used during tough economic times was formulated as "Which one of these are you most likely to use to pay your bills and cover other household expenses during tough financial times (e.g. recession or job loss, unanticipated expenses) should you didn't have enough cash on hand to cover them? Please choose all of the ones that you can."
Disclaimer
NerdWallet is not liable for, expressly or implicitly, any warranties that are implied or otherwise, such as the merchantability and fitness for a particular purpose or whether the article's information is reliable, accurate or free of errors. The use or reliance you place on this information is entirely at your own risk, as well as its completeness and accuracy are not guaranteed. The information contained in this article shouldn't be relied on or correlated with the performance in the future of NerdWallet or any of its affiliates or subsidiaries. Any statements that do not reflect historically accurate are forward-looking statements that are subject to risks and uncertainties, as expressed in terms such as "believes," "expects," "estimates," "may," "will," "should" or "anticipates" or similar phrases. These forward-looking statements may materially differ from NerdWallet's representation of data to analysts as well as its actual operational and financial results.










About the author: Elizabeth Renter's work as an experienced chief writer as well as data analyst for NerdWallet has been quoted in The New York Times, The Washington Post, CNBC and many other publications.







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