Inflation and recession risk mean buy now, pay later isn't going anywhere: report

Buy now, pay later (BNPL) options have been growing in popularity over the past few years, and higher prices due to inflation could mean the option is here to stay.

BNPL providers have faced regulatory and economic headwinds, however there are also several reasons why these providers could remain strong in the months ahead, according to a report from Morning Consult. Some of those factors include "strong consumer balance sheets despite inflation, the consistency of BNPL use so far this year, expected blockbuster sales from major retailers this summer and the appeal of low- to zero-interest payments as credit card interest rates climb."

BNPL is quickly gaining momentum as an alternate payment option, with its global transaction value having reached $120 billion in 2021, according to a new report from GlobalData. And the sector is likely to continue growing — GlobalData projected the BNPL market could reach $576 billion by 2026.

If you are looking for alternative forms of credit to fund your purchase, consider using a personal loan. Visit Credible to find your personalized interest rate today.

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Americans coping with rising prices

Inflation is currently surging and increased in June to a new 40-year high, marking the fifth time it's broken that record this year. The Consumer Price Index (CPI) increased by 9.1% annually in June, hitting its highest point since November 1981, according to the Bureau of Labor Statistics (BLS).

Because of this, many consumers are needing to dip into their savings or fund their purchases with credit, according to data from Morning Consult Economic Intelligence. Intentions to buy big-ticket items such as electronics, trips and vacations, home appliances and furniture have all decreased over the past year.

But despite these setbacks, consumer balance sheets are historically strong, according to Morning Consult. Net wealth as a share of disposable income is currently near a record high as household debt as a share of total assets is at its lowest level in nearly 50 years, according to data from the Federal Reserve.

Because of this, some consumers, especially from higher-income households, are actually increasing their spending and expected spending, according to the Morning Consult report. Households with an annual income of at least $50,000 reported a 25% increase in monthly spending from May 2021 to May 2022.

"To put it simply: People still have the means to buy things, but they are expecting items to cost more," the report stated. "And Morning Consult data indicates that they’re using BNPL to pay for some of them. The consistency with which U.S. consumers have used BNPL to fund their purchases throughout 2022 indicates that the payment form may be helping to keep their price sensitivity and substitutions at bay, and should be viewed as an indicator of the staying power of BNPL."

If you have used BNPL to pay for your purchases and want to pay it down, consider using a personal loan to help pay your debt. Visit Credible to compare multiple lenders at once and choose the one with the best interest rate for you.

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Americans continue to use BNPL options for purchases

The use of BNPL payments is not slowing, and the share of adults who used BNPL to fund a purchase at least once in the past month has not dropped below 16% in 2022, according to Morning Consult’s report. 

Adults with annual income between $50,000 and $99,999 as well as those with an annual income of $100,000 or more are even more likely to have used BNPL for a purchase over the past month at 21% and 20%, respectively.

And consumers expect to continue using BNPL.

"As more retailers partner with BNPL providers and more payment providers create their own BNPL offerings, adoption and strong usage will likely continue," the report stated.

Even as consumers purchase less big ticket items, they will continue to use BNPL for a wide variety of other purchases. Morning Consult’s report showed 35% of respondents used BNPL to purchase apparel, 32% used it to purchase electronics and 23% used it for footwear.

If you are interested in comparing credit options for your purchases, or want to pay down your debt accrued through BNPL purchases, consider using a personal loan. Contact Credible to speak to a loan expert and get all of your questions answered.

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