The number of back-to-school shoppers using “buy-now, pay later” apps to cover the cost of supplies has soared as they cope with decades-high inflation, according to a survey.
The survey by credit-reporting agency TransUnion found 37% of shoppers are turning to the layaway options offered by apps like Affirm, Afterpay and PayPal — up from just 2% who used the option last year.
“Families are especially hard hit by inflation, and back-to-school shopping represents a significant cost on top of everyday expenses,” Cecilia Seiden, vice president of TransUnion’s retail business said in a statement. “The ability to spread those payments out over time, interest-free, is a very attractive option to parents and students who are already stretched thin financially.”
The higher prices for supplies this year is causing shoppers to buy fewer items or less expensive versions of the same item, the survey of 1,000 adults conducted July 21-24 found.
Thirty-eight percent of consumers planned to substitute less expensive items for their school shopping, while 34% planned to purchase less, and 21% planned to stop purchasing some items altogether, according to the survey.
The report also found that higher income consumers are turning to buy-now, pay-later for expensive items, including televisions or Pelotons.
The ‘buy-now, pay-later’ apps allow shoppers anywhere from six weeks to a year to pay off the purchases — with fees charged if they miss a payment. Afterpay, for example, charges an $8 fee or 25% of the transaction, whichever is less for each late payment.
Other back-to-school surveys predict that inflation will temper consumer spending.
The back-to-school shopping season is expected to grow 5.5% this year compared to the dramatic 13.1% growth last year, according to Customer Growth Partners.
Meanwhile, Macy’s cut its forecast for the year on Tuesday because the department store is worried about the “continued deterioration of consumer discretionary spending,” the company said in a statement.