As the holiday season and festivities draw near, consumers, particularly those living paycheck to paycheck, are bracing themselves for the added financial stress that accompanies this time of year.
As noted in “New Reality Check: The Paycheck-to-Paycheck Report — The Seasonal Financial Distress Deep Dive Edition,” despite efforts to manage budgets and save, many consumers experience fluctuations in their financial standing throughout the year, with the holiday season being the most financially challenging period for a significant number of individuals.
The surge in holiday expenditures, including gifts and travel, significantly adds to consumers’ financial burden, with over 26% pointing to vacation costs as a key contributor to their financial stress.
Against that backdrop, buy now, pay later (BNPL) has emerged as a favored payment option, one that is helping consumers budget and manage their expenses with greater flexibility and convenience.
In fact, a joint study by PYMNTS and Sezzle found that the majority of consumers don’t regard BNPL as a credit product. Instead, they see it as a tool for managing cash flow, a preference shared across different age and income groups.
According to Chalub and White, BNPL options present a viable solution for consumers to book and fund their desired trips while spending the cash they have on hand. Furthermore, BNPL options also have a positive ripple effect once they land and check in, as an increasing number of merchants and service providers now offer consumers the option to spread the cost of goods, meals and tours over time.
Moreover, as Sezzle CEO Charlie Youakim told PYMNTS in an interview this summer, BNPL has an inherent advantage in the fact that failing to make a payment doesn’t automatically result in negative credit consequences, as only a few providers, including Sezzle, report payment histories to credit bureaus. “There’s a reason consumers are flocking to BNPL, and it’s because it’s better for them financially […],” Youakim said.
For consumers grappling with financial stress as they navigate holiday planning, these BNPL advantages take on even greater significance. For instance, the knowledge that failing to make a BNPL payment won’t necessarily lead to negative credit consequences offers a lifeline. It means consumers can manage their cash flow more effectively during a festive time when every dollar counts.