Understanding BNPL Delinquency Rates in the US

BNPL delinquency rates in the US have been on the rise, with 21.5% of BNPL users missing at least one payment in 2022. This is a significant increase from the previous year.

Delinquency rates vary across different age groups, with 25-34-year-olds having the highest delinquency rate of 23.1%. This is likely due to the fact that this age group has the highest average debt balance.

The average debt balance for BNPL users in the US is $1,445, which is a significant amount of money for many people. This can make it difficult for users to keep up with payments, leading to delinquency.

Delinquency rates are also influenced by the type of purchase being made, with 31.4% of BNPL users missing payments on purchases over $1,000. This is likely due to the fact that larger purchases require more significant payments, making it harder for users to keep up.

BNPL delinquency rates are a serious concern for users and lenders alike. A third of BNPL users have missed a payment in the past year.

Parents of young children and those making $100,000 or more a year in household income are the two groups struggling the most with late payments recently. Nearly half of the highest earners (49%) say they've paid late on a BNPL loan in the past year.

Men are more likely to say they've paid late in the past year, with 41% of men reporting late payments compared to 26% of women. Younger Americans, especially Gen Z BNPL users ages 18 to 27, are also more likely to say they've paid late.

Here are some key statistics on BNPL delinquency rates:

It's worth noting that BNPL users who have missed payments in the past year are more likely to be financially fragile, with one-third of BNPL users having a credit score below 620 or being delinquent on a loan at some point in the past year.

Demographics play a significant role in BNPL delinquency rates. Black consumers are about 63 percent more likely to use BNPL platforms than white consumers, while Hispanic consumers are 50 percent more likely.

Household income also affects BNPL use, with consumers earning less than $75,000 being four times more likely to use BNPL services than those with higher incomes.

In terms of age, younger Americans are more likely to use BNPL services, with 58% of Gen Zers and 55% of millennials having used a BNPL service at least once.

Here's a breakdown of the demographics most likely to use BNPL services:

It's worth noting that women are more likely to use BNPL platforms, with 20% of women using them compared to 14% of men.

BNPL apps have become increasingly popular among consumers. According to a study by C+R Research, there are about a dozen BNPL platforms in the United States alone.

PayPal Credit is one of the most popular platforms, with 57% of consumers using it. It allows you to split purchases in four, interest-free payments, with autopay and purchase protection features.

Afterpay is another well-known platform, used by 29% of consumers. It offers four, interest-free installments over six weeks, but charges a late payment fee of up to 25% of the purchase price.

Affirm doesn't charge annual or late payment fees, and its 4-installment loan has no maximum credit limit. The amount you qualify for is based on your credit.

Klarna is also a popular option, with four, interest-free payments and a credit limit determined by your credit. Its app features a price comparison tool to help consumers save money.

Zip (Zip Pay) is a global BNPL service used by over 94,000 merchants worldwide. It charges a $6 installment fee and a $5 late fee, but offers rewards and discounts at select retailers.

Here's a comparison of the most popular BNPL platforms:

Black consumers are about 63 percent more likely to use BNPL platforms than white consumers. This significant difference highlights the varying adoption rates of BNPL services across different racial groups.

Hispanic consumers are 50 percent more likely to use BNPL platforms than white consumers. This disparity suggests that different racial groups have distinct preferences when it comes to payment options.

Here's a breakdown of BNPL usage by race:

Consumers with a household income of less than $75,000 are four times more likely to use Buy Now, Pay Later (BNPL) services than those with a household income above that threshold.

According to the Federal Reserve, 72.6% of BNPL users have a household income of less than $75,000, while only 17.6% of users have a household income of $75,000 or more.

This significant disparity highlights the importance of income in shaping consumer behavior when it comes to BNPL services.

More and more people are using Buy Now, Pay Later (BNPL) loans as a bridge between paychecks. This is especially true for parents with young children, with 43% saying they use BNPL to make ends meet.

A growing number of people, including millennials, are using BNPL loans to buy groceries. In fact, nearly 1 in 5 millennials (19%) have used BNPL to buy groceries.

Clothing, shoes, and accessories are the most common things people buy with BNPL loans. This is true across all demographics, regardless of age, income level, or parental status.

The use of BNPL loans as a bridge between paychecks is a concerning trend, especially given the financial struggles many American families face due to inflation.

One-third of BNPL users have paid late in the past year, which can have serious consequences for their credit scores.

This is a concerning trend, especially considering that BNPL services are now being used by every demographic to some degree.

According to a recent report, 34% of buy now, pay later users have missed a payment in the past year.

Parents of young children and those making $100,000 or more a year in household income are the two groups struggling the most with late payments.

Nearly half of the highest earners (49%) say they've paid late on a BNPL loan in the past year.

Men are also more likely to say they've paid late in the past year, with 41% admitting to doing so.

Younger Americans are at least twice as likely to say they've paid late, with Gen Z BNPL users ages 18-27 leading the way at 45%.

Here's a breakdown of the demographics most likely to have used a BNPL service:

Those who've used a BNPL service are highly likely to do so again, with two-thirds (67%) of users saying they've used BNPL services at least twice.

A third of BNPL users have paid late in the past year, with 34% saying they've missed a payment and another 13% saying they've paid late but not in the past year. This means nearly half of BNPL users have paid late at some point.

Parents of young children are struggling the most with late payments, with 50% saying they've paid late in the past year. Men are also more likely to pay late, with 41% saying they've done so compared to 26% of women.

Gen Zers are at least twice as likely to pay late, with 45% of BNPL users ages 18-27 saying they've paid late in the past year. This is a concerning trend, especially since BNPL is now a mainstream financial tool used by every demographic.

43% of Americans have used a BNPL service, with the most likely users being Gen Zers (58%), parents with young children (57%), millennials (55%), and men (50%). Baby boomers are the biggest holdouts, with just 24% saying they've used a BNPL service.

Two-thirds of BNPL users have used the service at least twice, with 20% using it six or more times and 8% using it more than 10 times. This suggests that BNPL is becoming a habitual choice for many users.

Buy now, pay later (BNPL) is still a relatively new concept compared to the ubiquity of credit cards, with Americans' collective credit card balances adding up to a staggering $1.08 trillion.

The lines between BNPL and credit cards are blurring, as some BNPL providers now offer debit cards that allow users to opt into installment loans.

In contrast, credit card issuers offer similar functionality through programs like American Express Pay It, Plan It and My Chase Plan.

You can get a credit card that offers a balance transfer with a generous interest-free term, which can help you pay down debt.

Affirm's founder, Max Levchin, thinks of the Affirm Card as the "anti-credit card", with no late fees and a clear payment schedule.

With almost half of credit card holders carrying debt from month to month, it's worth focusing on paying that debt down before worrying about rewards.

Almost half of BNPL users have paid late on one of these loans at some point, with 47% of users having done so.

This is a significant increase from 2023, when 40% of users had paid late. The convenience of BNPL might be contributing to this trend, as 30% of users say they use the loans as a "bridge" between paychecks.

More than 4 in 10 Americans have used a BNPL service, with 43% of Americans having done so. This makes BNPL a popular financing option, especially among Gen Zers (58%), parents with young children (57%), millennials (55%), and men (50%).

Regret is common among BNPL users, with 43% having regretted financing a purchase with BNPL. This might be because 54% of BNPL users have financed a purchase with BNPL knowing they couldn't afford it at the time.

Returning items purchased with BNPL can be challenging, with 51% of BNPL users agreeing that it's much more difficult than returning an item bought with cash, credit, or debit.