The most recent trend in America is grabbing; due to financial difficulties, people are purchasing daily food products and groceries on credit. This is a startling reality about this industrialized nation. Following the COVID outbreak, many households are experiencing financial issues, and inflation is making it harder for them to stick to their monthly budget. Thus, consumers are utilizing instant credit applications to purchase food by obtaining loans through BUY NOW, PAY LATER schemes, often known as BNPL. Individuals use it to obtain the gadgets they want. People use it to get their desired devices, to buy appliances, or for expensive purchases like a car or machinery.
These kinds of schemes are like you can buy something today on a loan and get what you need on the same day, but you don't have to make the payment immediately. The bill will be split in easy installments and pay the loan over a period of time. However, purchasing food on EMI indicates a financial hardship. It usually indicates that you don't have enough cash on hand to cover basic living expenditures like food.
In the first two months of 2020, during the Covid-19 quarantine, food accounted for 40% of BNPL loans, followed by home furnishings at 38% and other items at 8%. Due of their extremely user-friendly interfaces and one-step installation and registration method, these apps trapped households in need of financial support throughout and after the pandemic. Pay later loans were just $2 billion as of 2019. In just two years, (2021), that amount rose to $24 billion, or almost 1000%, higher.
It's probable that some Americans are receiving loans to pay for groceries because they are experiencing financial difficulties or have unforeseen costs that prevent them from affording basic essentials like food. This can be especially difficult for people who are unemployed or live paycheck to paycheck because unforeseen costs or a loss of income can quickly deplete their savings.
To pay for their urgent needs, such as groceries, some consumers may resort to payday loans or other high-interest loan products. Regrettably, these loans may include exorbitant fees and interest rates, making it challenging to repay them on time and maybe creating a debt spiral.
People who are having a hard time making ends meet should look for services and assistance that can assist them in resolving their financial difficulties in a long-term manner. This can entail looking for financial guidance or support, investigating food assistance programs or other public assistance options, or figuring out how to get more work or job training to boost their income.
https://www.nytimes.com/2022/08/29/dining/buy-now-pay-later-loans-groceries.html