Gen X Embracing Buy Now, Pay Later: A Closer Look at Changing Credit Trends

In recent times, Buy Now, Pay Later (BNPL) has surged in popularity, offering consumers the convenience of paying off purchases in interest-free installments. While commonly associated with younger generations, the reality is that Generation X (born between 1965 and 1980) is also finding value in this payment method.

Contrary to expectations, a study conducted by PYMNTS in collaboration with Sezzle revealed that 14% of Gen X consumers had used BNPL in the beginning of 2023. This is the same amount as Gen Z (14%) and a bit lower than millennials (20%).  

However, what sets Gen X apart is their propensity to use various credit products. With 43% holding mortgages and 39% having auto loans, their BNPL adoption is characterized by a conscious choice for specific purchases. Gen X utilizes BNPL primarily for substantial items, opting for this payment option to sidestep interest charges and ensure timely repayment within a predetermined short period.

Interestingly, the versatility of Gen X's BNPL use is noteworthy. While they use BNPL mostly for clothing (21% of BNPL purchases), they also lead in travel-related BNPL use, outpacing other age groups. Additionally, Gen X uses BNPL for furniture more than Gen Z and millennials. 

Moreover, BNPL is not limited to discretionary spending for Gen X. They exhibit the highest rate of BNPL use for healthcare (3.7%) and education expenses, suggesting a strategic financial approach. This inclination might stem from their multi-generational responsibilities, often supporting aging parents and children simultaneously.

Incorporating BNPL into their credit mix is allowing Gen X to navigate larger expenses while adhering to budgetary constraints. This generation's embrace of BNPL serves as a testament to its widespread appeal, cutting across age and income demographics. As financial dynamics continue to evolve, BNPL emerges as a vital tool in Gen X's arsenal for achieving financial stability.

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How BNPL and other loan providers can capture Gen X market

In order to thrive, BNPL providers and loan institutions should adapt to Generation X's evolving financial needs. Tailoring BNPL plans to address their unique multi-generational responsibilities and spending patterns is key. Highlighting flexibility and interest-free options for essential expenses like healthcare and education can resonate with this demographic. Clear communication and educational resources will forge a stronger bond, making BNPL a vital tool for Generation X's financial journey.

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Sources:

PYMNTS and Sezzle Collaboration Report: The Credit Economy: How Younger Consumers Make Credit Decisions