Three out of four consumers claim that credit cards make it difficult for them to manage their finances because of varying payments and additional fees for making late payments or going over their limit, according to the results of a survey commissioned by Affirm, a Buy Now, Pay Later provider.
Consumers want more control and flexibility from their payment options that allow them to better manage their finances, according to the results of the poll. Among different financial products that do that, Buy Now, Pay Later (BNPL) was at the top of the list, with 48% of consumers saying it makes them feel most in control of their finances. That was followed by credit cards (41%) and cash (28%).
Nearly two-thirds of consumers report feeling “in control” of their finances, but 80% of consumers admit they could be doing a better job managing their money. More than three-quarters of consumers say they are financially prepared if the economy goes into a recession, but the average consumer spent $350 more than he or she budgeted in the first six months of 2023 and 83% said they plan to adjust their budgets for the remainder of the year.
BNPL is different than a credit card because consumers have to apply every time they want to use the product to make a purchase. If approved, consumers have a couple of options for how they would like to repay the debt, such as making four equal payments in two-week installments. BNPL does not have compound interest like credit cards do.
“We can’t talk about buy now, pay later without putting it in the context of the larger credit landscape,” said Libor Michalek, President of Affirm. “The reality is that the average American has three credit cards and nearly $6,000 in revolving credit card debt, while financial institutions collect billions in late fees each year. That is a lot of money coming from consumers’ pockets when they need it most. We offer a more intelligent and responsible way to access credit – you can’t revolve with Affirm by design, and we don’t charge late or hidden fees.”
