BNPL: Should I Use It For Back To School Shopping?

Over the past few years, American consumers have struggled with the impact that inflation has on their wallets. With back-to-school season officially underway, basic classroom necessities have also fallen victim to rising prices over the past few years.

Tools and apps such as “buy now, pay later” have grown in popularity in recent years to combat the rising cost of living, but most experts agree that the tools shouldn’t be used as a first choice this semester.

Key cost statistics for the new school year

Despite falling inflation, shoppers still feel the pressure of rising prices

The cost of back-to-school shopping has placed a lesser financial strain on consumers’ wallets this year, according to Bankrate’s Back to School Survey: The survey found that 32% of back-to-school shoppers have changed or plan to change their shopping habits due to inflation, down from 41% in 2022. But that doesn’t mean consumers aren’t feeling the strain of rising prices.

“While inflation has generally been coming down, many prices remain high,” said Mark Hamrick, senior analyst and Washington bureau chief at Bankrate. The overall cost of educational books and materials fell an average of 3.4% between August 2022 and August 2023, according to the Consumer Price Index. That doesn’t mean costs have returned to pre-inflation levels.

Amy Sims is an editorial director at Bankrate and a mother of two who’s a veteran when it comes to back-to-school season. When asked if she’s noticed the prices of school supplies increasing in recent years, her answer is a resounding “yes.”

“This year, we’ve spent about $150 just on school supplies for one of our middle school kids,” Sims said. “And that doesn’t include reusable items like headphones or other expenses.”

For families sending their kids off to school this year, these expenses can take a big bite out of their monthly budgets, especially for families with two or more children. In fact, 31% of back-to-school shoppers estimate that they will end up in debt on their back-to-school purchases as a result of inflation, including 13% who are using or plan to use “buy now, pay later” services to deal with expenses.

“Shopping for school supplies has always been difficult because you have to find very specific items that meet the criteria on a list,” Sims said, “but it’s become even more dreadful now because it’s become so difficult and expensive over the last few years.”

Is BNPL a good choice for back-to-school shopping?

“Buy now, pay later” (BNPL) apps and loans have quickly become one of the mainstream financing options in the U.S. According to Bankrate’s Buy Now, Pay Later survey, more than one-third of Americans (39 percent) have used at least one BNPL service at checkout.

Aaliyah Kissick, personal finance expert and CEO of Financial Literacy Diaries, says that while BNPL isn’t an “ideal” solution for back-to-school shopping, it’s an option for shoppers in times of difficulty. However, Kissick advises avoiding BNPL products that charge interest. “If you know you’ll have the money to pay off before your next statement balance arrives or if your credit card has a lower interest rate, consider using a credit card,” Kissick says.

Hamrick echoed Kissick’s sentiments, arguing that there are better options out there when it comes to your annual back-to-school shopping: “While there seem to be more and more buy-now, pay-later options available, budgeting and saving in advance for this annual rite of passage: back-to-school shopping is a much better strategy,” Hamrick said.

“My concern is that if families haven’t budgeted or saved for school-related purchases, they also don’t have instalments planned and are at risk of incurring further burdens, especially as interest rates rise,” Hamrick added.

As with any financial tool, whether or not you use a BNPL product to fund school supplies will depend on several factors.

When to use BNPL to cover back-to-school expenses

Individuals who have minimal expenses and the necessary funds to make payments in full and on time may benefit from using a BNPL plan.

In certain circumstances, using BNPL tools or similar funding options can be a smart financial move for individuals who need to spread the cost of back-to-school shopping.

• The cost must be paid through an online shop or store that encourages the use of BNPL.
• I’m not sure I can pay the full amount at once, but I can pay it in installments.
• Rising inflation and interest rates are affecting both the prices of essential items and credit card interest rates.
• You don’t want to use up too much of your available credit on small expenses that you can pay for with a BNPL tool or app.

When not to use BNPL to cover back-to-school costs

People who already have a lot of high-interest debt, especially BNPL debt, should not use BNPL for back-to-school expenses.

Since using “buy now, pay later” products involves potential risk factors, we recommend that you avoid similar payment options if any of the following scenarios apply to you:

• They have set aside funds specifically for the purchase and can pay the costs without financing.
• I already have multiple BNPL loans and am struggling to manage my balances.
• The amount of purchases that need to be expensed is large, and the monthly payments don’t fit neatly into your monthly budget.
• When you pay with a credit card, you can earn rewards and points on your purchases.

How to cut back-to-school costs

Like 46% of back-to-school shoppers, you’re likely looking for ways to save money this semester. Thankfully, most people preparing for back-to-school have access to free or deeply discounted supplies within their community.

1. Research local need-based programs and charities

To cut down on school costs, start with local charities and nonprofits. Not all of them do this, but many hold community-wide donation events in time for back-to-school. Call your local community outreach center or do a quick search online to see if there are any organizations in your area that accept donations.

The most commonly donated items include backpacks, writing materials, and other basic items needed in the classroom, but donations of food and clothing may also be included, although clothing may be for younger students or children rather than adult learners.

If your school requires students to wear uniforms, some organizations partner with schools to run uniform donation drives. Often set up like shops or stores, these drives run a few weeks before the start of the school year and offer free or heavily discounted uniforms. To see if there are similar programs in place in your area, call your school or local community outreach center to find out your options.

2. Contact the school to inquire about supplies and exemptions

Although K-12 public education in the United States is free, learning still costs money. For example, most schools charge fees and costs throughout the year depending on the grade level of the student.

Parents and guardians may have to pay for a variety of expenses, including food, school-sponsored extracurricular activities, class field trips, extracurricular programs, etc. Most school districts waive these fees for families who qualify for a larger program such as free or reduced lunch, internal scholarships, or similar school-sponsored assistance programs.

Public schools in the US don’t usually offer equipment exemptions, as teachers are primarily responsible for ensuring their classrooms are stocked with supplies. Some schools provide equipment for free, so it’s a good idea to call the front office before the school year starts and ask.

3. Check out discount sites and warehouse stores

Discount stores and dollar stores often sell basic school supplies needed in the classroom. Shopping with different real estate agents instead of big box stores can save you thousands of dollars. In college, buying textbooks and technology can be a large part of your expenses. To help you save on some of these costs, there are online retailers and brick-and-mortar stores that sell used materials and needed technology.

Be sure to visit stores that cater to students at your university. These stores are more likely to have the materials you need for your classes. You can also visit national online stores to cut down on the cost of textbooks and materials. Websites like thriftbooks and Facebook Marketplace are great for finding used and discounted books.

How to pay for back-to-school shopping without using buy now, pay later

To make back-to-school shopping a little easier on your bank account, consider these options.

• 0 percent APR credit cards: Some credit cards offer a 0 percent interest introductory period, usually between 12 and 21 months. To get the most out of your card, it’s best to pay off your balance in full before the introductory period ends.

• Secured Credit Cards: If you can’t qualify for a regular credit card or other financing options, a secured card might be your best bet. Like secured loans, lenders will work with people with bad credit, but to get approved, you’ll need to secure the balance with some sort of collateral (usually a down payment).

• Cash Advance App: A cash advance allows you to receive a portion of your paycheck before your payday. You must pay off the balance by your next payday, so only use this option if you can pay off the balance in time.

• Small LoansSmall loans are need-based loans offered by select credit unions and banks as an alternative to high-interest payday loans. They are a low-cost, government-supervised way to lend up to around $1,500.