Consumers rely on buy now, pay later amid record inflation, use credit to pay it off

  • Nearly 60% of consumers say inflation makes them more likely to use buy now, pay later products
  • 22% of buy now, pay later users report using credit cards to cover their purchases 
  • 53% of consumers who have used buy now, pay later say they’ve done so out of necessity

Right now consumers are facing record-high inflation, which is driving up prices of everyday goods and services. That, coupled with the economic backlash from the ongoing COVID-19 pandemic, has led many Americans to rely on various forms of credit to make ends meet – and that includes buy now, pay later services. 

According to a new study conducted by Qualtrics on behalf of Credit Karma, nearly 60% of consumers say inflation makes them more likely to use BNPL products to pay for purchases. What’s more, many are doing so out of necessity. According to the study, 53% of consumers who have used BNPL products say they use them to pay for items out of necessity with another 45% saying they’re most likely to use BNPL options when their finances are tight. 

Adoption of BNPL is on the rise.  

According to the latest study, 61% of Americans have used buy now, pay later services to pay for an item they needed, up from 44% reported in September. At the same time, half of respondents who have used BNPL say their usage has gone up in the past six months with the majority of users juggling between one to three BNPL purchases at a given time. 

This can really add up for consumers. 

Among respondents who have used BNPL products to pay for an item, 40% currently have an outstanding balance. Those carrying a balance owe an average of $665, with men tending to owe more than women. On average, men have an outstanding balance of $937 while women owe closer to $400. When asked about the largest amount ever owed across all buy now, pay later services, one-in-five reported owing more than $1,000. 

How and where are consumers spending all of this money? 

Most consumers are intentional about their BNPL purchases. According to the study, 61% of BNPL users say they decide ahead of time if they will use BNPL to pay for an upcoming purchase. However, 38% say they typically decide to use BNPL at the point of checkout on a particular retailer’s website. 

Consumers who use BNPL apps and services typically are most likely to do so at department stores (40%), specialty stores (32%) and e-commerce stores (31%). However, there’s also a group of consumers who use BNPL at warehouse stores (18%), discount stores (17%) and supermarkets (13%). This demonstrates the sheer spread and accessibility of BNPL among retailers. 

Excuse me, how would you like to pay for that? 

When it comes time to pay for BNPL purchases, most consumers do so with a debit card or through a linked bank account. However, more than 20% say they typically use their credit card to cover their payments. This may be fueling a cycle of debt for some consumers. In fact, nearly a quarter of BNPL users say their debt load increased after using buy now, pay later products to make a purchase. 

On the flip side, 34% of those who have used BNPL say they are most likely to use these services to avoid credit card debt. 

Regardless of how the payments are made, consumers are getting the hang of BNPL. 

According to the study, less than 20% of BNPL users have missed one or more payments, that’s down from 34% reported in September. What’s more, consumers’ credit scores don’t seem to be taking as much of a hit. Of those who missed at least one payment, 33% say they saw their credit score decline – that’s down from 72% in September. This could indicate consumers are getting smarter about BNPL and borrowing more responsibly. 

To that end, exactly half of all respondents who have used BNPL say they’re aware of how these products impact their credit and another 66% say they fully read the terms and conditions of the service before making a purchase. 

“The buy now, pay later industry has experienced massive growth over the last few years, and consumers are finally starting to become more savvy when it comes to using these products to fund their purchases – especially when it comes to making on-time payments toward their loans,” said Colleen McCreary, consumer financial advocate at Credit Karma. “I’ve always said BNPL services are a great tool for consumers who wish to spread their payments out over time. However, like any loan product, it can be a dangerous path for those who do not borrow responsibly. Previously, we found consumers were missing payments and, while that has improved, we’re now seeing people use debt to pay off debt, which can be a vicious cycle. If you’re planning to use BNPL, make sure you budget accordingly. Otherwise, you might find yourself taking on more debt than you can reasonably afford.”      


On behalf of Credit Karma, Qualtrics conducted a nationally representative online survey in February 2022 of 1,028 Americans, aged 18 and above, to gauge utilization of buy now pay later products, how consumers are managing their BNPL debt and the impacts of missing repayments of BNPL products on a person’s credit score.