Cash-Strapped Consumers Are Using ‘Buy Now, Pay Later’ At The Supermarket

After years of post-COVID price hikes, shoppers started to become cautiously optimistic that the soaring inflation rate was finally beginning to approach normal. But the latest reports show that inflation is still hotter than analysts had anticipated.

And it’s the necessities — groceries in particular — that are really putting the pressure on struggling shoppers.

A blessing or a curse?

Along with a rise in prices came a surge in the availability of easy credit options known as “buy now, pay later.”

Roughly 6.5% of the U.S. population (that’s roughly 15 million people) used BNPL to buy groceries last year. The overwhelming majority of those shoppers fell into the “low-income” category.

If used responsibly, there are some pros. It’s easier to obtain credit through BNPL platforms than most credit cards. And if borrowers pay off their loans according to the established schedule, the added cost of interest or fees is minimal.

But that easy credit comes with a huge potential downside. It’s easier than ever for consumers to borrow more than they can afford, and the penalties for late or missed payments can add up quickly.

What’s the answer?

The reality is that, generally speaking, groceries are a whopping 22.3% more expensive than they were in 2020. That means folks are forced to make some tough decisions. Three-fifths of shoppers who earn less than $100,000 per year said they’ve had to scale back their grocery lists as a result.

But there are only so many cost-cutting measures available — so if BNPL is the only remaining option, be sure you know what you’re getting into.

“If used responsibly, BNPL can be a great resource,” said financial expert Erika Kullberg. “However, it is a double-edged sword that can quickly turn against you if not used properly.”

Chris Agee March 18th, 2024

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