As the holiday shopping season begins, consumers in the U.S. are projected to spend an unprecedented $18.5 billion using buy now, pay later (BNPL) services, according to Adobe Analytics. This surge in spending reflects the growing popularity of BNPL options, which gained traction during the COVID-19 pandemic, resulting in $75 billion in online purchases in 2023 alone. BNPL providers like Affirm and Klarna allow shoppers to make purchases by paying in installments, typically over four months. Notably, delinquency rates for BNPL loans are significantly lower than those for credit cards, with most users managing to pay on time. However, a concerning trend is that a substantial percentage of BNPL users also carry credit card debt, indicating potential financial strain. The U.S. Consumer Financial Protection Bureau has introduced new regulations for BNPL lenders to ensure better consumer protection, highlighting the need for transparency in this rapidly growing sector.
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