Forty-eight percent of Gen Z consumers said they used BNPL for purchases from October through December 2022. Of those, 20% said they used a BNPL solution more than three times.
Overall, 61% of Gen Z consumers aged 18 to 24 say they have bought items using BNPL. They are as likely to use BNPL for purchases as credit cards, though only about half of Gen Z consumers have a credit card, compared to two-thirds of millennials, 77% of Gen X and 85% of baby boomers.
Gen Z consumers say they are turning to BNPL financial services for purchases for several reasons, including enjoying flexible payment schedules and payment options, buying something they otherwise could not afford and wanting an alternative to credit cards. Shoppers today are already carrying high consumer credit card balances. In 2022, more than a trillion dollars of credit card debt was outstanding. The average household now owes $8,900 on their credit cards.
Many are trying to avoid the high interest rates of credit cards and hits to their credit score. Others say they enjoy the transparency of the payment plan, so they know how long it takes to pay off a big purchase rather than the uncertainty of credit card payments. Paying over time allows consumers to see when payments are due, the exact amount required and when the payments will end.
Recent interest rate hikes by the Federal Reserve are also giving consumers pause. Factoring in the impact of rate hikes on credit card rates produced an additional $22.9 billion in credit card debt in 2022. With rising interest rates, many consumers are looking for alternative ways to pay without adding to their debt or hurting their credit scores.