Buy Now, Pay Later Shopping for Back-to-School Supplies? 37% of Americans Say Yes

Back to School Outlook, South Miami, United States - 27 Jul 2022
Marta Lavandier / AP /

Inflation is at a four-decade high — and now, with back-to-school (BTS) season in full swing, more than half of Americans expect to spend more than they had years previous. In fact, a third of respondents answering questions posed by a new TransUnion study intend to use Buy Now, Pay Later (BNPL) options for said BTS purchases.

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This recent TransUnion study found that 55% of consumers expect to spend more on their back-to-school shopping in 2022, with inflation driving the increase. In addition, the study suggested that 37% of consumers have already — or plan to — use BNPL loans for their back-to-school purchases.

What is BNPL, and Why Is it Popular With Consumers?

BNPL is a type of deferred payment option that generally allows the consumer to split a purchase into smaller installments, typically four or less, often with a down payment of 25% due at checkout, according to the Consumer Financial Protection Bureau (CFPB). 

As several American families are hit hard by inflation, the ability to spread out purchase-related payments can be attractive, the study noted. Mark Rose, senior director for TransUnion’s retail business, told GOBankingRates that, “we see lower income families more likely to use BNPL for necessities, such as supplies and clothes, while higher income families were more likely to use BNPL for expensive items not necessarily required for back to school, such as TV, Peloton.”

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“BNPL is an easy and convenient way to manage rising costs at such an important time of year for families that need flexibility,” Rose added.

Deloitte Survey Backs TransUnion’s Findings

To put this in context, a recent Deloitte 2022 Back-to-School survey showed spending up 8% from 2021 — and up 27% from 2019 — with clothing and accessories at the top of the category increases. The survey also indicated that back-to-school is typically the second-largest spending event for parents, placed behind holiday spending. Perhaps it is hardly a surprise that this year, 57% of parents say they are concerned about inflationary costs on back-to-school products. Further, 37% say they expect to spend more on back-to-school products year-over-year. 

In terms of generational breakdowns, Rose said that while consumers have broadened BNPL usage, “Millennials have the highest adoption, followed by Gen Z, driven in part by their usage of BNPL to buy smaller ticket items like clothes and supplies.”

Millennials represented the largest generational group of consumers represented in terms of using BNPL for their back-to-school shopping (47%), followed by Gen Z at 34%, Gen X at 31%, and baby boomers at 25%, Rose said.

“This is understandable given they are the generation most likely to have young children in their household and value flexible payment options to help mitigate inflation,” Rose explained.

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Parents Buying Cheaper (and Fewer) School Supplies

Another finding presented via the TransUnion study is that consumers also plan on making other changes in response to inflation, including buying fewer and cheaper items.

For example, 35% of parents buying for their children say they’re buying cheaper versions of standard items. In addition, 36% say they are spending more to buy the usual items, 32% say they are buying less of some items, and 19% stopped buying some items altogether, the study noted.

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In terms of what items consumers mostly use BNPL purchasing for regarding BTS shopping, 62% say they are doing so to buy books and other items needed for school, while 52% are using it to buy a single expensive item, such as a computer, that is needed for school.

“While BNPL has its origins as an easy and convenient way to finance a high-priced item, its more recent growth can be attributed to merchants promoting it as a payment mechanism for more routine purchases,” Rose said. “We’re seeing this mostly with millennials and Gen X, while Gen Z and baby boomers are more likely to use BNPL for expensive items since they either have older children that require computers or are students themselves.”

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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