More buy-now-pay-later arrangements have been creeping into the consumer credit market since the COVID-19 lockdowns, according to a new report by NBC News:
“Why pay all at once? It’s a question consumers are getting asked more often at checkouts, as installment plans resembling those offered by ‘buy now, pay later’ services pop up in more places.
“Popular BNPL offerings like Afterpay, Affirm, Sezzle, Klarna and others — which let borrowers break up a purchase into several equal installments with little or no interest — exploded during the pandemic, fueled by lockdown-era e-commerce, stimulus checks and savings. Adoption of the installment loans has cooled since then, but their influence over how consumers spend with borrowed money is just getting started.
“Aaron Gans, a 37-year-old resident physician in New York City, got a notification in March from his American Express Platinum card offering to split his and his husband’s $1,700 charge for their flights to Taiwan and South Korea into 12 interest-free installments. He said yes.
“‘It was exactly what I needed to do some fun stuff and not go into debt,’ said Gans. ‘Or at least not feel like I’m going into debt.’
“In an era of stubborn inflation and stretched household finances, as well as high interest rates stoking fears of credit card debt, lenders are leaning into a model that many shoppers — especially younger ones — are embracing as a way to keep spending. That BNPL-ification of consumer credit is underscoring existing socioeconomic divides, with people of different means paying off debt in installments for different reasons.”
To read the entire article by NBC News, please click HERE.