The use of short-term deferred payment loans to cover grocery costs is on the rise, according to a recent survey by Lending Tree, a leading online loan marketplace. This trend suggests that many Americans are facing economic difficulties and turning to non-traditional forms of financing to make ends meet.
- According to the survey, nearly half of consumers have used a buy-now, pay-later service, such as PayPal, Affirm, or Klarna, for a wide range of purchases.
- A significant increase was seen at supermarkets, where 25 percent of those polled said they used an installment payment plan for groceries, a 14 percent increase from the previous year.
The rising use of short-term loans for food costs may be attributed to various factors, including inflation, high interest rates, and tariff concerns. These economic pressures may be causing people to look for alternative ways to manage their finances and make ends meet. As noted by Matt Schulz, Lending Tree’s Chief Consumer Finance Analyst,
“A lot of people are struggling and looking for ways to extend their budget. Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”
In addition to supermarkets, other industries such as electronics, clothing, and home decor have also seen an increase in the use of buy-now, pay-later services. However, the survey highlights the concern of some lenders that these services may be overused or misused, leading to potential financial pitfalls.
- 64 percent of Gen Z respondents reported using a buy-now, pay-later service, which is a significant proportion of this age group.
- 93 percent of respondents said they are very or somewhat confident they can pay off their loans on time, although 60 percent said they had multiple installment loans at once.
The potential risks associated with short-term loans should not be underestimated. As Schulz emphasized,
“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it.”
Furthermore, the ease with which third-party lenders offer these services can contribute to the risk of overextension. For instance, 16 percent of buy-now, pay-later users already used an installment plan for restaurant food delivery or takeout, indicating that some people may be using these services for non-essential purchases.
| Average Loan Amount | $142 |
In conclusion, while the recent survey suggests that Americans are not necessarily facing a looming recession, the rising use of short-term loans for food costs highlights the challenges that many people are facing in managing their finances. As Schulz noted,
“I do think it’s going to get worse, at least in the short term.”
The ongoing trend of increased economic uncertainty and the growing reliance on non-traditional forms of financing suggest that Americans may need to be more cautious and aware of the potential risks associated with short-term loans in the future. As such, it is essential for individuals to approach these services with a clear understanding of the terms and conditions and to carefully evaluate their financial situation before making any purchases.
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