Why “Funflation” and Buy Now, Pay Later Could Reshape How You Experience Live Events — And What Investors Must Watch
Live concerts and festivals are back with a bang, but the price tag is getting steeper. The era of “funflation” — a term economists now use to describe rising costs in entertainment and leisure — is hitting Americans’ wallets hard. Big-name tours from artists like Taylor Swift, Beyoncé, and Coldplay have driven ticket prices upward, making live events a costly indulgence. According to the Bureau of Labor Statistics, admission fees for movies, theaters, and concerts jumped 3.9% in the year through June 2023. That’s no small change when you factor in travel, merchandise, and dining.
Here’s the kicker: nearly a quarter of Americans (23%) are turning to buy now, pay later (BNPL) loans to manage these costs, per a recent LendingTree survey of 2,050 U.S. adults. This trend is especially pronounced among younger generations — 37% of Gen Z (ages 18–28) and 35% of millennials (29–44) have used BNPL for concerts or festivals. For Gen Xers (45–60), it’s 19%, and baby boomers (61–79) trail far behind at 3%.
Why This Matters for Investors
The rise of BNPL in entertainment spending signals a broader shift in consumer finance behavior that savvy investors and advisors cannot ignore. BNPL providers are tapping into a lucrative market segment hungry for experiences but strapped for upfront cash. This trend aligns with the growing “experience economy,” where consumers prioritize events and memories over material goods.
But there’s risk baked into this model. BNPL loans often come with hidden fees and high interest rates—some as steep as 36% APR on longer-term plans, according to NerdWallet. Late fees can be punishing, too, sometimes reaching 25% of the purchase value. Unlike credit cards, many BNPL plans lack robust consumer protections, such as purchase dispute resolution or refund guarantees, which can backfire if concerts are canceled or rescheduled.
Expert Insight: Budgeting for Fun
Matt Schulz, chief credit analyst at LendingTree, offers a practical tip that investors and consumers alike should heed: “Carve out money in your budget as your ‘Beyoncé fund’ or your ‘Taylor Swift fund.’” This simple budgeting hack encourages financial discipline around discretionary spending, helping avoid the debt traps that often accompany BNPL usage.
Credit Cards vs. Buy Now, Pay Later: What’s the Smarter Choice?
Credit cards still hold advantages despite their higher average interest rate (just over 20%, per Bankrate). They provide purchase protections that BNPL plans often don’t, making it easier to get refunds if events are canceled. Plus, credit cards reward users with cash back, points, or miles—benefits that 65% of concertgoers plan to leverage this year, LendingTree reports.
However, credit cards can lead to long-term debt if balances aren’t paid off promptly, whereas many BNPL plans spread payments over a few months interest-free. This nuanced trade-off means financial advisors should tailor recommendations based on clients’ spending habits, credit discipline, and risk tolerance.
What’s Next? Actionable Steps for Investors and Advisors
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Monitor BNPL Market Growth: The BNPL sector is expanding beyond retail into experiential spending. Investors should watch for emerging fintech players innovating in this space and assess regulatory developments, as increased scrutiny could impact profitability.
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Advocate Financial Literacy: Advisors should educate younger clients about the pitfalls and benefits of BNPL vs. credit cards. Encouraging budgeting strategies like “event funds” can reduce reliance on credit and improve financial health.
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Spot the “Funflation” Impact: Entertainment and leisure sectors are evolving as consumers allocate more budget to experiences. Investors might explore opportunities in live event promoters, ticketing platforms, and ancillary services that benefit from this trend.
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Evaluate Consumer Protection Trends: With the Federal Trade Commission’s recent rule changes aimed at ticket price transparency, it’s clear regulators are paying attention. Future policies could reshape how BNPL providers operate, affecting user adoption and market dynamics.
A Unique Statistic to Consider
Recent data from the National Endowment for Financial Education reveals that nearly 60% of Gen Z adults feel overwhelmed by managing their finances, making them more vulnerable to high-cost credit options like BNPL. This demographic insight underscores the importance of targeted financial education and could influence consumer credit markets for years to come.
In Summary
The intersection of rising entertainment costs, the popularity of BNPL loans, and shifting consumer financial behavior presents both risks and opportunities. For investors, understanding these dynamics is crucial to identifying growth areas and mitigating potential credit market disruptions. For consumers, especially younger generations, disciplined budgeting and informed payment choices can make the difference between memorable experiences and financial headaches.
Stay ahead of the curve by watching how “funflation” evolves and how BNPL reshapes consumer spending in the live events space. This is one trend where financial savvy pays off—both in your portfolio and your personal life.
Source: Using buy now, pay later loans for concert tickets