Home Entertainment Lending Survey Shows Buy Now, Pay Later Could Matter This Holiday Season – Forbes Advisor

Survey Shows Buy Now, Pay Later Could Matter This Holiday Season – Forbes Advisor


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As inflation continues to plague the United States as we head into the holiday season, buyers are looking for whatever monetary relief they can get. This includes short-term “buy now, pay later” loans. Many consumers, especially younger consumers, prefer BNPL over other financing options due to the lack of interest charges, simple approval process, and ease of use.

A buy now pay later plan lets you spread equal payments over multiple months, making it useful for big purchases like a TV or sofa. When you repay a BNPL loan on time and in full, you can often avoid interest charges. Borrowers generally find it easier to qualify for an BNPL plan with lenders such as Affirm, Afterpay and Klarna than a traditional credit card or loan.

However, some BNPL loans offer 0% interest for a certain period only, meaning you could be stuck with interest payments down the road. Other BNPL loan options charge interest upfront.

Additionally, some BNPL plans hit borrowers with fees. And if you pay late, it could show up on your credit reports.

In November, Forbes Advisor and OnePoll surveyed 1,000 US consumers who have used BNPL at least once to find out what their experiences have been, what they think of the popular funding trend and how they could use it this holiday season.

The survey results indicate that BNPL will be almost as popular among holiday shoppers as Rudolph the Red-Nosed Reindeer, but this payment method could eat away at their finances the way Jack Frost nibbles on people’s noses.

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Americans plan to rely on buy it now and pay later during the holiday season

The survey results demonstrate the widespread use of BNPL, with five major industry players originating 180 million loans in 2021 totaling more than $24 billion, according to the Consumer Financial Protection Bureau (CFPB).

In the survey, 64% say they will use BNPL to buy gifts during the holiday season. And many of those shoppers may shell out more money than they bargained for: 70% of respondents say they would use BNPL to spend more than they bargained for.

The survey also indicates that buyers do not necessarily use BNPL for big ticket items. The most popular types of purchases are clothing, electronics and shoes. And 40% of respondents say they would use BNPL for a purchase under $100.

Howard Dvorkin, president of Debt.com, says BNPL can be a useful tool or a nuisance. Dvorkin says you could win if you use a BNPL loan and pay it off before interest charges kick in instead of carrying a balance on a high-interest credit card.

“But you have to be a checklist type of person – someone who regularly watches the deadlines in your life. Otherwise, these benefits evaporate,” he adds.

Consumers are using buy now, pay later in surprising ways

The main reason cited for using BNPL is to reduce the impact of a large purchase (66%). But the second reason is more open to interpretation. More than half (51%) say they use it to buy something they can’t afford right now.

Meanwhile, 70% would consider BNPL for everyday purchases, not just special purchases. One in five respondents would use it for less than $50.

Ed Mierzwinski, senior consumer program director at the nonprofit watchdog group PIRG, cautions against relying on BNPL to pay for everyday purchases like food and gasoline.

“You should never pay over time — ‘four easy payments!’ — for something you’ll need to replace sooner. You’ll need food and gas again before you finish paying,” says Mierzwinski. “These consumers need better budget planning, not more opportunities to spend money.”

In fact, a recently published academic study found that new BNPL users experience “rapid increases” in overdraft fees and credit card interest and fees compared to non-users. The study looked at the banking data of 10.6 million US consumers. The researchers say their study underscores concerns about the potential damage BNPL could cause to overall spending habits and financial health.

Types of purchases made with Buy now, pay later

Lowest purchase amount with Buy Now, Pay Later

What is the lowest amount for which you would use “buy now, pay later”?

Does buy now pay later encourage reckless spending?

When it comes to BNPL, the splurges may be on the rise.

Seventy percent of respondents say they use BNPL to spend more than expected, while one in four uses it to justify an impulse purchase. Still, some BNPL users are practical: 57% say knowing that BNPL exists makes them more comfortable dealing with a surprise bill, like replacing a major appliance.

Dvorkin says that in many cases it might be better to use a credit card unlike a BNPL loan. That’s partly because the BNPL makes it even easier to spend the money you don’t have, he says.

“While each plan is a little different, all charge high late fees. And if you don’t pay off the full balance, you’ll face a financial nightmare later,” says Dvorkin.

When a borrower fails to make timely payments, many BNPL lenders charge late fees that often amount to around $7 for each missed payment on an average loan of $135, according to a report published in September 2022 by the CFPB.

For example, BNPL lender Klarna charges a late fee of up to $7 after a 10-day grace period after a missed payment. Klarna only charges one late fee for each late payment. For comparison, a credit card issuer can charge up to $30 for the first late payment and $41 for a subsequent late payment within six billing cycles.

Reasons Consumers Use Buy Now, Pay Later Services

For some people, like those who can’t qualify for a credit card, BNPL can be a blessing, according to Jim Triggs, president and CEO of Money Management International, a nonprofit credit counseling agency.

“If a consumer needs tires for their vehicle, their water heater breaks down, or other unforeseen, unbudgeted emergency expenses arise, BNPL is often their only option, especially when it comes to free or low-cost financing options,” says Triggs.

Still, Triggs says customers often tell him they regret making a major purchase with an BNPL plan, even though they felt able to repay the loan.

Majority of Gen Z users don’t believe they are in debt when using Buy Now Pay Later

Forty-three percent of BNPL users do not consider themselves in debt when they owe money on a purchase, even though BNPL is a form of debt. This rises to 51% among Gen Z users. Meanwhile, 57% of all respondents say they have made late payments on an BNPL purchase.

Dvorkin notes that many BNPL plans offer multiple months of 0% interest. But if you make a late payment or miss a payment, you could face hefty financial penalties, he says. And the situation can get worse if you are dealing with several BNPL loans at the same time.

The survey shows that the average BNPL user currently refunds three previous purchases.

“I would never recommend juggling multiple BNPL shots at once, any more than I would recommend juggling hand grenades with all the pins drawn,” advises Dvorkin.

Taking out multiple BNPL loans around the same time can potentially cause you to overspend and increase your debt load.

It should be noted that most BNPL providers do not yet report payment activity to the three major credit bureaus. However, Equifax, Experian, and TransUnion accept BNPL payment data, which means BNPL loans may show up on your credit reports.

What does all this mean? Depending on your behavior, BNPL payments could help or hurt your credit score if they show up on your credit report. Or your BNPL payment activity might have no effect on your credit score if your BNPL lender does not report your information to major credit bureaus.

Find the best credit cards for 2022

No credit card is the best option for every family, every purchase or every budget. We have selected the best credit cards so as to be the most useful for the greatest number of readers.


The trendy “buy now, pay later” financing option is used for purchases that are smaller than you think, including holiday gifts. Consumers should be careful though – BNPL may encourage unplanned purchases. And while it’s different from other types of debt like credit card debt or mortgage debt, owing money on a BNPL purchase is still a form of debt.

Survey methodology

This online survey of 1,000 American American adults who have used a “buy now, pay later” service at least once was commissioned by Forbes Advisor and conducted November 9-14, 2022 by the market research firm OnePoll.