Buy Now, Pay Later: A Growing Trend in Holiday Shopping

As the holiday season approaches, many consumers are exploring new ways to manage their spending. One trend that has gained significant traction is the use of Buy Now, Pay Later (BNPL) plans. According to a recent survey conducted by Experian, BNPL is becoming an integral part of holiday shopping for many consumers. In this blog, we will delve into the findings of the survey and explore why BNPL is becoming a popular choice for holiday shoppers.

Buy Now, Pay Later Is Part of 1 in 5 Consumers’ Holiday Plans

BNPL plans are not set to replace credit card spending entirely, but they are certainly making a mark. Data from Pymnts Intelligence reveals that about half of U.S. consumers have made at least one credit card purchase on every Black Friday since 2020. However, BNPL plans are increasingly becoming a part of holiday spending strategies. On Cyber Monday alone, consumers spent nearly a billion dollars using BNPL plans, marking a 42.5% increase over 2022, according to Adobe Analytics.

The Experian survey indicates that 20% of consumers plan to use BNPL plans for their holiday shopping this season. This trend is particularly prominent among younger consumers, with nearly half of those aged 25 to 34 planning to use BNPL for at least some of their holiday purchases. The adoption rate declines with age, with only 10% of those aged 65 or older expecting to use BNPL.

Household Income Not a Factor for Buy Now, Pay Later Usage

Contrary to popular belief, household income does not significantly influence the use of BNPL plans. Experian’s data shows that individuals with higher incomes are just as likely to use BNPL plans as those with lower incomes. This finding is somewhat surprising, as BNPL plans are often perceived as a financing option for lower-income consumers.

One of the major incentives for using BNPL plans is the interest-free payments. With credit card interest rates averaging close to 23% APR, many consumers are reluctant to add more holiday spending to their credit cards. This is especially true considering the average credit card balance was $6,365 in mid-2023, according to Experian data. Even millionaires are not immune to carrying interest-accruing credit card debt.

A Convenient Budgeting Tool That Avoids Interest

For those planning to use BNPL for holiday spending, controlling their budget is a primary reason. According to the survey, 34% of consumers cited managing spending as their main reason for choosing BNPL, while 31% mentioned convenience. Avoiding interest payments was another significant factor, with nearly a quarter of consumers highlighting this benefit.

Interestingly, only 11% of consumers cited the lack of other funding alternatives as their reason for choosing BNPL. This suggests that BNPL is not just a last-resort option but a preferred method for many consumers due to its convenience and cost-saving benefits.

The Bottom Line

As BNPL plans become more ubiquitous, they are likely to become even more integrated into consumers’ shopping habits, not just during the holiday season but throughout the year. The growing popularity of BNPL, especially among younger consumers, suggests that this payment method could significantly impact how we spend and save during the holidays for the foreseeable future.

At O1ne Mortgage, we understand the importance of managing your finances effectively, especially during the holiday season. If you’re looking for mortgage services that cater to your unique needs, don’t hesitate to call us at 213-732-3074. Our team of experts is here to help you navigate your financial journey with ease and confidence.

Whether you’re considering a new mortgage or looking to refinance, O1ne Mortgage is your trusted partner. Contact us today and let us help you achieve your financial goals.

Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include the use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analyses. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data. FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.