In times of financial constraint and soaring food prices, an increasing number of Americans are turning to buy now, pay later (BNPL) options to manage their expenses.
Research from PYMNTS Intelligence indicates that last year, approximately 15 million consumers, constituting 6.5% of the US population, utilized BNPL installment loans to cover grocery expenses or manage their weekly food budgets. Notably, around 5.4% of households utilizing BNPL for grocery purchases belonged to the low-income bracket.
Interestingly, while the majority of BNPL users for groceries were from lower-income groups, a small percentage of higher-earning individuals earning over $100,000 annually also opted for the “pay-in-four” installment loans to finance their monthly food purchases.
Experts suggest that this trend may persist into the current year as consumers across all income brackets grapple with escalating prices.
Erika Kullberg, an attorney and personal finance expert, highlighted that as the cost of living rises, individuals find it increasingly challenging to manage their budgets and meet expenses. In such circumstances, BNPL offers a short-term solution by allowing shoppers to spread out payments over time.
Despite a recent stabilization in food prices, which remained unchanged for most items in the latest inflation reading, they remain substantially higher than 2020 levels, with a notable increase of 22.3%. This surge in costs has compelled households across all income levels to make adjustments.
For instance, half of consumers earning more than $100,000 indicated that they had reduced nonessential spending at grocery stores. Meanwhile, over 60% of those earning less than $100,000 reported cutting back on spending due to the high cost of food.
To mitigate expenses at checkout, many consumers are resorting to cost-saving measures, such as opting for more affordable retailers like Target instead of Whole Foods. Additionally, some are opting for lower-quality food items, such as foregoing organic produce, in favor of more budget-friendly options.
