Posted BY: Jane Nguyen

Americans are increasingly turning to buy now, pay later (BNPL) apps to purchase their daily needs amid sky-high inflation, according to a new survey.

BNPL options allow consumers to pay for purchases in installments.

A new LendingTree survey shows that about 46 percent of consumers used BNPL this year, up from 43 percent a year ago and 31 percent in 2021.

LendingTree commissioned Qualtrics to conduct an online survey of 2,044 U.S. consumers ages 18 to 77 on March 7–8.

The study finds 46 percent of consumers have used the payment method for clothing, shoes, and accessories. Home furniture and appliances came in as the next largest category at 34 percent. Technology and beauty products came in at 27 percent and 26 percent, respectively.

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Furthermore, 21 percent of shoppers used the plan for groceries, according to the survey. Some 27 percent of users use the loans as a bridge to their next paycheck.

BNPL took off during the COVID-19 pandemic as consumers with tighter wallets sought alternative funding.

The BNPL option resembles a personal loan where payments are split into equal installments over a period of time. This form of payment is often interest-free as long as payments are made in full on time, which makes it an attractive alternative to credit cards.

However, things don’t always work out, as the survey noted that more than half of users say they’ve regretted a BNPL-financed purchase, and 40 percent of these users have paid late in one of the loans.

As with credit cards, late fees will pile up if BNPL users fall behind on payments, hurting their credit scores.

Fifty-six percent of consumers across generations say they prefer BNPL over credit cards due to the ease of fixed payments, the simple approval process, and the lack of interest charges, according to a PYMNTS survey.

Buy now, pay later services are engineered to encourage consumers to purchase more and borrow more, which can lead borrowers to take out several loans within a short time frame from multiple lenders that they may be unable to pay back, the Consumer Financial Protection Bureau warns.

The U.S. market has several BNPL apps, such as Klarna, Affirm, Afterpay, and Sezzle. The growth in BNPL use has led other companies to join the industry, with Apple Inc. introducing Apple Pay Later in late March.