Gen Z Chooses Cash Over BNPL

A new study has found that Gen Z is no longer a fan of “buy now, pay later” platforms, as the specter of endless debt racks up in their minds.

Why It Hits: BNPL platforms like Affirm, Klarna, and Afterpay have been aggressively pushing into youth-focused retailers to ease the burden of making a big purchase. While Gen Z embraced that a couple of years ago, it looks like the payments have caught up with them — a phenomenon that could ripple throughout the economy.

Behind the Purchases: Gen Z is getting tired of the recurring payments, according to a new study by USC’s Center for Public Relations and Day One Agency.

• Asked whether they’d rather pay for something outright or with installment payments, only 14% of 18-to-25-year-old respondents chose installments — compared to 59% who said they’d pick cash and 27% who said they didn’t have a preference.
• That’s because there’s a vibe shift among Gen Zers — a Credit Karma survey found that 86% said they “left 2024 with financial regrets, their most prolific regret being overspending.”
• Now, they’d rather rip the Band-Aid off on purchases right away rather than feel buyer’s remorse every two weeks (one in five Gen Zers ironically say paying with cash feels like using “free money”).
• Also, respondents said that they don’t want all the micro debt to hurt them when it comes to being able to one day apply for a mortgage… even though a FICO/Affirm study found that BNPL usage didn’t negatively affect scores for the majority of borrowers.

Checkout: Interestingly, the turn away from BNPL platforms hasn’t stopped Gen Z from slowing down on credit-card use, seemingly because the debt isn’t tied to any one purchase, and the generation has gotten pretty savvy at optimizing rewards tied to card usage (especially when it comes to travel). To take advantage of those points, watch for Gen Z to only use credit on  bigger purchases… and for actual, physical cash to potentially become popular with young people again. Call it “nostalgia currency.”