Why ‘Buy Now Pay Later’ could be wrecking your financial future

Buying now to pay users later, it is increasingly pushing.

Klarna, one of the many companies that allow users to buy something now and pay in installments over time, He said last month Consumer credit losses increased in the first three months of the year by 17 % from last year, as users struggled to pay payments. This was confirmed by previous surveys that show a similar rise. A Wiped by LindingTree 41 % of users were paid late at least once in the past year, an increase of 34 % of last year. The Bankrase 18 % survey showed a batch.

With the slowdown of the economy and Big friendly savings GoFinancial advisors warn of users, who TendIt can be BNPL Destroy their financial future.

“If you are using BNPL, it is likely that you will not have savings to cover the costs of making purchases,” said Rick Miller from Miller Investment Management.. “Savings for retirement are probably not an idea in your mind. You need to pay yourself first and you should not spend what you cannot bear.”

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Americans often use BNPL to buy a commodity or service that they cannot tolerate currently. They pay the first and spread the rest of the cost over time and pay in installments. In essence, they take a loan to achieve the balance.

A quarter of BNPL users say they have Use loans to buy Grocery stores said that the LindingTree survey of 2000 American consumers between the ages of 18 and 79 from April 2 to 3. Amid high prices In the supermarket, he said.

Lindingtree said that a third of users believe that BNPL is “Bridge” to their next salary. This increases from 30 % last year and 27 % in the previous year.

Lindingtree said that clothes, including shoes and accessories, are the most common element using BNPL, followed by technology and home decoration devices.

The average purchase amount was $ 142 in 2022, the last year of data, According to the Financial Consumer Protection Office (CFPB). However, observed nearly 63 % of users who have many BNPL loans.

• An increase in spending: “Dependence on BNPL and short debts give consumers a false feeling of the ability to bear costs, making it easier to over progress financially,” said Hayan Huang, the chief credit official in Bruceber.

• Reducing borrowing in the future: “If BNPL helps you make purchases, you cannot pay them, so your credit degree can get a blow,” Miller said, especially if you miss the payments, Miller said. “This can hinder your ability to borrow in the future, which may be very important as you get older and search for a real estate loan (or).”