BACK-TO-SCHOOL SHOPPING has begun to creep into the minds of parents, students, and teachers alike preparing to return to the classroom. As consumers evaluate the costs of back-to-school expenses in today’s inflationary economic environment, 68% say they’re seeing higher prices on back-to-class items (National Retail Federation).
As a result, purchasing habits are changing - back-to-school shoppers report doing more comparative shopping online (43%), shopping for sales more (42%), buying more store brand/generic products (35%) and making do with last year’s school items (24%). Preparing to start a new school year can be very costly when clothes, supplies and books are all factored in. A recent Deloitte survey highlighted that on average, parents plan to spend $661 per child for back-to-school shopping in 2022, up 8% from 2021 and 27% from 2019. It also noted that clothing and accessories lead the increase, costing 18% more this year on average with school supplies costing 7% more.
Fifty percent of Americans have used a Buy Now, Pay Later (BNPL) service in the last year - making it a likely source of credit in this back-to-school shopping season. BNPL loans offer a payment option that typically involves short-term, interest-free installment payments that empower consumers with the ability to access necessary items immediately – when they need it most.
Equifax is committed to helping people and communities live their financial best, and was the first consumer reporting agency to formalize a process for the acceptance of Buy Now, Pay Later (BNPL) payment information in traditional U.S. consumer credit reports. BNPL loans provide an option for the consumer to split a purchase into smaller installments and has now become, in many respects, the new version of the familiar layaway plan. The important change is consumers get the product immediately instead of after they make payments.
“The objective of BNPL reporting solutions is to equip lenders with information to help expand access to credit, assisting consumers with the opportunity to both build and rebuild credit when they pay their BNPL loans on time,” said Mark Luber, Chief Product Officer at Equifax U.S. Information Solutions (USIS). “We hope to also empower consumers to utilize this tool so that they have additional financial options for purchases that support and fit their needs and lifestyle.”
A recent Equifax profile on the typical BNPL consumer shared that the popularity of Buy Now, Pay Later has risen exponentially and is forecasted to reach $82.1 billion in 2022. Many have already found that BNPL products offer ease of use, simple payment terms and affordable credit opportunities that make purchases of varying sizes achievable for most consumers.
In addition, if BNPL loans are reported to the Equifax credit file, they could play a big role in helping people build stronger financial profiles. An Equifax study of anonymized consumer data from a BNPL provider shows that individuals who pay their BNPL loans on time could potentially increase their FICO® Score - helping consumers to both build and rebuild credit.
While back-to-school can be a hectic time for many, BNPL has proven to be a financial tool that can be used for everyday purchases – from cell phone apps to web browser cart checkouts – BNPL is at consumer fingertips as a financial alternative to consider.