A growing number of younger consumers are choosing buy, now pay later services to make purchases across various categories, including apparel, travel, and home decor. This allows them to pay via manageable installments without the need to pay the full price upfront.
The most popular BNPL category among this group is now arts, travel and entertainment, which has supplanted apparel and accessories. That’s according to new data culled from BNPL fintech Afterpay, which also found that consumers are increasingly buying common household items via BNPL plans.
Among consumers ages 18 to 44, spending on travel tickets rose by a stunning 1430% last year, pushing the travel category into the top spot previously held by apparel.
Apparel has also been surpassed by the home and garden and hardware categories, an indicator that BNPL is also being used for smaller, everyday items. For instance, spending on contact lenses, garbage bags, lighter fluid, laptop parts, and snoring and sleep apnea aids all more than doubled within the past year.
Consumers ages 35 and under represent more than half of all BNPL users, compared to just 35% of traditional credit card holders. As such, they’re a group worth keeping an eye on. Separate Morning Consult data from last August found that 37% of Gen Z adults and 32% of millennials had used BNPL in that month alone, while just 16% of Gen Xers and 6% of Baby Boomers had done so.
Economic Stress Among the Young
Part of this trend is being fueled by the economic stress experienced by younger consumers, many of whom struggle to manage their debts. Data from The Centre for Financial Capability revealed that 22% of BNPL users missed one or more repayments, with younger demographics being particularly prone to such delays.
“There are economic stressors like the high inflation rate that are impacting household finance and, for younger audiences, things like student loan payments, non-stable income, and certainly high interest rates on card products,” said Ben Danner, Senior Analyst for Credit and Commercial at Javelin Strategy & Research. “All these things are turning them towards BNPL products for everyday spend categories. This plays right into the hand of BNPL vendors who are increasingly marketing themselves as a tool for everyday spend—even launching physical card products to have a place in the wallet.”
