The belief that credit cards have seen their heyday and must now make way for Buy Now, Pay Later (BNPL) has been further supported by Splitit’s latest research. Splitit, the company empowering shoppers to use their credit cards to pay in instalments, has released research that found UK credit card users are now looking at BNPL as the principal way to manage their finances.
The survey, UK Consumer Perspectives: Credit cards and Buy Now Pay Later, investigates credit card holders’ attitudes towards spending, specifically around BNPL. The data shows that over half of UK respondents (54 per cent) are planning on using BNPL services in 2022, with almost a fifth (20 per cent) planning to do so on four or more purchases in the next 12 months. When asked whether they consider BNPL to be a smarter way to manage personal finances, 46 per cent agreed or strongly agreed that it is.
The insights also indicate that credit cards are used by consumers as part of a responsible approach to managing their finances, with 28 per cent owning one to help build credit and 43 per cent paying off the full outstanding balance each month. Further, almost half (49 per cent) of those surveyed agree they’d prefer to use BNPL that uses their existing credit card with 63 per cent saying they prefer to have the option to pay monthly.
While 54 per cent of those surveyed are fine with four or fewer payments for purchases under £300, 67 per cent favour more than four payments for a £500 purchase, and 86 per cent want more than four on purchases of £1,000 or higher.
As the market’s only credit-card-based instalment payment solution, Splitit enables consumers to spend smarter and better using the balance on their existing credit cards to pay for higher-ticket purchases over time without new financing, interest or fees. The company attracts higher-value shoppers willing to spend more using the flexible platform. In fact, the survey shows 53 per cent of credit card holders would spend more with a merchant if they could pay over time.
As they think ahead to making larger purchases with a value of over £1,000, several categories in particular stand to make gains by offering a BNPL solution:
- Half of the respondents would make purchases on home improvement (51 per cent) or home furnishings (52 pere cent).
- 44 per cent would use BNPL for travel purchases.
- Over two fifths (42 per cent) would engage a BNPL service for healthcare not covered by the NHS.
- 41 per cent would buy automotive accessories and repair using BNPL.
“The rise of online shopping has empowered consumers to become more financially aware, giving them easier access to tools to help them more effectively manage their money,” said John Harper, Splitit’s Interim CEO. “With so many shoppers planning to use BNPL services, I expect 2022 to be the year of the financially savvy shopper, innovatively managing money to maximise personal benefit.”
In other findings, the survey revealed that 74 per cent are happy with their credit cards, and 58 per cent see credit cards as part of a healthy approach to personal finances. Also, 56 per cent would use their cards more often if they had a lower interest rate, and 56 per cent would likely use their cards if they could pay in smaller, interest-free instalments.
Interestingly, the survey found 29 per cent of respondents feel credit card perks – such as cash back, points or miles – are important. Because consumers who choose to pay in instalments with Splitit are still using their credit cards, they continue to receive the same points or miles that they typically earn with that card.
Harper added “There has been much debate about the decline of the credit card and its role in the future. These results show that for many financially savvy consumers there is still a place for the credit card. This trend is mirrored in the usage and growth on our own platform.”