More than one third of Americans say they’re considering BNPL loans for their holiday shopping, according to a Morning Consult poll.
11/21/2023 2:05 P.M.
2.5 minute read
Black Friday is coming up fast, and many stores have already started rolling out their sales. To fund their holiday purchases this year, more than one third of Americans (35%) have said they’re considering buy now, pay later (BNPL) loans, a jump of eight percentage points from 2022, according to a Morning Consult poll.
BNPL services through companies such as Klarna, Afterpay and Affirm are growing in popularity with consumers, who are attracted to the ability to make interest-free payments on a product or service they might not otherwise be able to afford.
BNPL has already seen solid traction this year, with usage up in both October and November. In fact, BNPL plans are expected to fuel $17 billion in online holiday spending this year, according to forecast data from Adobe Analytics as reported by the Washington Post.
However, BNPL services can lead consumers into financial trouble if they’re not careful. Forbes reported that “BNPL borrowers who aren’t able to make their payments on time face an array of fees and interest rates that can top 36%. An October report by the Consumer Federation of America and the Center for Responsible Lending found late fees can be as high as $25, and some providers do not limit how many times the fees can be charged. In addition, BNPL lending is not subject to the same federal regulation as credit cards or installment loans from a bank or credit union. That means they’re not required to offer certain consumer protections, such as chargeback rights.”
A Consumer Financial Protection Bureau report found that BNPL borrowers often show higher measures of financial distress compared to non-borrowers, including having more credit card debt and more frequent use of high-interest financial services such as payday loans.
Interestingly, although higher income groups are less likely to use BNPL, the CFPB found that 12% of consumers with incomes between $125,000-$200,000 borrowed at least once using BNPL financing in the previous year.
A Growing BNPL Landscape
Recently, both Apple and Amazon have jumped into the BNPL game.
Last month, Apple expanded the 2022 rollout of its Apple Pay Later service to all U.S. users. Apple Pay Later lets users make a purchase and then pay for it in a series of four installments over the course of six weeks without any interest or late fees.
“With this wider launch, Apple Pay Later is now going head-to-head with buy now, pay later services from PayPal, Affirm, Klarna and countless others,” according to Tech Crunch.
Amazon Pay recently expanded its BNPL program for shoppers who have the Prime Visa and the Amazon Visa. Cardholders can get a 0% annual percentage rate for six or 12 months on purchases of $50 or more made with thousands of participating online retailers. And earlier this month, Amazon and Affirm announced an expanded partnership that makes Affirm the first pay-over-time option available at checkout on Amazon Business.
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