Despite the appeal of spreading out payments with "Buy Now, Pay Later" (BNPL) services offered by companies like Affirm, PayPal, Block, and PROG, a survey by Bankrate and YouGov Plc reveals substantial consumer challenges. Over half of BNPL users have encountered issues, including overspending (29%), trouble getting refunds (18%), and missing payments (18%). BNPL plans are praised for enabling greater credit access and offering low-to-no interest, presenting an attractive alternative to traditional credit cards. However, the ease of acquiring BNPL loans can lead to multiple concurrent plans and potential financial strain. Although BNPL missed payments may not immediately affect credit scores, severe delinquency could have serious consequences. The rise in BNPL's popularity is partly due to high borrowing costs, with economically vulnerable consumers, particularly those with low incomes or poor credit histories, being the most likely to utilize this payment method. Experts caution that while BNPL can alleviate immediate financial pressure, it may contribute to unsustainable debt accumulation over time.
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