More Than Half of Shoppers Overspending by Financing Gifts This Holiday Season

Mature couple looking at a Christmas market stall in a city centre.
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With the holiday season fast approaching, shoppers are leveraging “buy now, pay later” (BNPL) services to spend more than they can afford upfront. According to a recent report by Cardify, about 45% of shoppers plan to use BNPL services to spread out their holiday spending.

See: How Much Your Holiday Spending Could Cost You If You Don’t Pay Right Away
Find: Survey Suggests 20% Will Use ‘Buy Now, Pay Later’ for 2021 Holiday Shopping — Millennials and Gen Z Lead the Pack

“It’s become more mainstream,” said Derrick Fung, CEO of Cardify, per CNBC. “The consumer over the last 12 months has become more compulsive and BNPL products are the result of us being locked up for too long and wanting more instant gratification.”

A growing number of retailers are offering shoppers the ability to buy a product and pay for it in equal installments. An August survey by Credit Karma shows that 44% of Americans have used BNPL services. Of those who used BNPL services, 34% have fallen behind on one or more payments. Missing a payment could result in late fees, deferred interest or other penalties depending on the lender, CNBC added.

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Cardify also noted that installment buying could push consumers to spend more than they can afford. Cardify found that nearly 46% of shoppers would spend less if BNPL wasn’t an option.

A separate report from Oxygen also shows that 56% of shoppers have made a purchase with BNPL they couldn’t pay off, CNBC said, and 43% said if an expensive item had a BNPL option they would be more likely to make a purchase.

See: How Buy Now, Pay Later Loans through Affirm & Afterpay Can Decrease Your Credit Score
Find: How To Resist the Temptation of Overspending During the Holidays

The Consumer Financial Protection Bureau warned that while BNPL may be a tempting option, consumers shouldn’t overextend themselves financially to take advantage of these offerings.

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.
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