Money Worries Push Some Shoppers to Tighten Budgets but Others Find Relief with Buy Now Pay Later
As the pandemic continues to affect the economy, many families are struggling to make ends meet. With financial worries at an all-time high, some shoppers are tightening their budgets as much as they can while others are finding relief in the popular “buy now, pay later” shopping model.
A survey conducted by the Federal Reserve Board of Governors found that a significant proportion of American households experienced economic difficulties in the past year due to the COVID-19 recession. These difficulties include job loss, furloughs, or reduced working hours. On top of the decreased income, many families have had to deal with higher household expenses and increased debt.
Given that nearly half of Americans’ household budgets are devoted to housing and transportation, many of them may not have much ability to adjust their spending. This is why some shoppers are tightening their budgets, to be able to manage their current expenses. They may be putting off larger purchases unless absolutely necessary, and they may be limiting spending on smaller items by cutting out frequent purchases like eating out or buying expensive groceries.
However, for shoppers who can still afford to buy what they need, the “buy now, pay later” option is becoming increasingly popular. This model of shopping, often called “deferred payments” or “app-based lending”, is quickly becoming a go-to form of finance. It allows shoppers to purchase items with no upfront costs or interest, and instead make repayments over time.
Buying now and paying later gives some shoppers a much-needed sigh of relief. They can buy what they need now without having to worry about paying a large bill immediately. According to research from Finreach, up to two-thirds of shoppers favor this model of shopping as it helps them budget for purchases and allows them to avoid taking on more debt.
In the current economic climate, it’s important to make sure you’re budgeting wisely and not overspending. But for those that have the financial means to purchase items and enjoy a little extra shopping splurge, the “buy now, pay later” model can provide the needed relief.