Increasing Use of Buy Now, Pay Later Loans for Groceries in America
As economic pressures mount, a growing percentage of Americans are utilizing buy now, pay later (BNPL) loans to finance essential grocery purchases. Recent findings from Lending Tree reveal a troubling trend: more individuals are relying on these loans and facing late payment issues.
Key Findings from the Lending Tree Survey
In a survey conducted from April 2-3, which included 2,000 U.S. consumers aged 18 to 79, approximately 50% reported having utilized BNPL services. Notably, the use of BNPL loans specifically for grocery shopping has increased significantly:
- 25% of respondents stated they use BNPL for groceries, up from 14% in 2024 and 21% in 2023.
- 41% admitted to making a late payment on a BNPL loan over the past year, a rise from 34% in the previous year.
Matt Schulz, the chief consumer finance analyst at Lending Tree, noted that most late payments were typically by a week or less, indicating that many consumers are struggling to manage their budgets effectively.
The Economic Context
Schulz emphasized the broader economic environment that is contributing to this trend. “A lot of people are struggling and looking for ways to extend their budget,” he explained. Factors such as persistent inflation, elevated interest rates, and uncertainties surrounding tariffs are significantly impacting consumer behavior. Schulz added, “It’s going to mean leaning on buy now, pay later loans, for better or for worse.”
Risks of BNPL Loans
While BNPL loans can provide a viable alternative to traditional credit by allowing consumers to break down large purchases into smaller payments without interest, they also carry risks. Those who take out multiple loans may face high fees if late payments occur. The survey indicated:
- 60% of BNPL users have multiple loans.
- Nearly 25% of users hold three or more loans simultaneously.
Schulz cautioned users to exercise caution. “Even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” he stated. “People should tread lightly.”
Broader Implications and Trends
The trend of increasing BNPL usage among consumers has sparked conversations about financial well-being in the U.S. For instance, a recent revelation highlighted that around 60% of general admission attendees at the Coachella music festival financed their tickets using BNPL options, raising questions about the state of the economy.
Companies like DoorDash are also entering this space, announcing they will accept BNPL financing for meals, further illustrating how consumers are leaning on loans to support their lifestyles amidst economic challenges.
Outlook and Consumer Behavior
The initial resilience of consumers in the face of inflation and high interest rates might be waning, as shown by warnings from major corporations like Walmart and Delta Airlines about weakening demand and disappointing sales forecasts. Schulz notes that the outlook could potentially worsen in the short term, stressing that conditions are likely to decline further before improvement occurs.