Despite fears of a debt crisis spurred by "buy now, pay later" (BNPL) services, the actual risks appear minimal. The U.S. economy has bypassed the projected recession largely thanks to robust consumer spending. Critics argue that this spending is unsustainable, built on the shaky foundation of increasing consumer debt, particularly highlighting the rise of BNPL as a potential major risk. However, BNPL, which allows consumers to make purchases in interest-free installments, is portrayed more dangerous than it is. The total BNPL transaction volume is not indicative of debt risk, as it includes all transactions, not just those unpaid after the due date. Major BNPL providers like Klarna, Afterpay, and Affirm report manageable outstanding balances and low delinquency rates. Compared to the trillions in household debt, BNPL's contribution is minuscule, suggesting that fears of a significant economic impact are overblown and more reflective of a broader anxiety regarding new financial technologies than an actual fiscal threat.
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