The emerging popularity of “buy now pay later” (BNPL) payments does not seem to be dampening credit card-holder enthusiasm.
According to a recent survey of 2,000 credit card-holders from credit-card-based installment payment solution provider Splitit, 60% of respondents would prefer to use a BNPL option with existing credit cards vs. opening new lines of credit. Additionally, 64% of respondents anticipate their credit card spending to be the same or more than they did in 2021.
The survey, “U.S. Consumer Perspectives: Credit Cards and Buy Now Pay Later,” found most respondents (56%) would prefer to make installment payments monthly instead of every two weeks (25%). The number increases the larger the purchase amount, with 70% preferring monthly payments on purchases of $500 or more.
Results also indicate consumers clearly prefer options in the number of payment installments. While 60% of those surveyed are fine with four or fewer payments for purchases under $300, 66% favor more than four payments for a $500 purchase, and 75% want more than four on purchases of $1,000 or higher.
As shoppers think ahead to making larger purchases and considering using a BNPL or installment plan on purchases over $1,000 in the year ahead, several categories stand out to make gains. For example, nearly two-thirds of respondents would make purchases on home improvement (66%) or home furnishings (63%).
Beyond the home, other top categories are healthcare expenses not covered by insurance (62%), automotive accessories and repair (61%), travel (56%) and jewelry (51%).
Previously released data from eMarketer confirms the rapid growth of BNPL payments. According to eMarketer, more than 45.1 million U.S consumers ages 14 and older were expected to use a BNPL platform during 2021, up 81.2% over the prior year. This represents more than one-fifth (21.5%) of digital buyers in the U.S. By 2025, the figure will grow to more than one-third. Younger consumers are driving adoption of flexible payments, eMarketer said. Millennials account for 42.7% of BNPL, followed by Gen Zers, which account for 30.3%.
Interestingly, the Splitit survey found 83% of respondents feel credit card perks – such as cash back, points or miles – were important, and 48% say it's the primary reason for using their credit cards.
In other Splitit findings, the survey discovered 83% are happy with their credit cards, and 71% see credit cards as part of a healthy approach to personal finances. Also, 69% would use their cards more often if they had a lower interest rate, and 63% would likely use their cards if they could pay in smaller, interest-free installments.
"Despite the discussions around the decline in credit card use, we're continuing to see continued growth on our platform, including many key categories around the home, fitness and sporting goods, jewelry and luxury," said John Harper, Splitit interim CEO. "From what we're seeing so far in the past few months, 2022 will continue to be a year where people will be spending on the home and themselves. I also expect spending to shift eventually as more people are heading back to work as people upgrade their wardrobe and accessories."