Despite high inflation and interest rates, Americans spent a record $331.6 billion online in the early months of 2024, a 7% increase from the previous year. This surge is attributed largely to the use of Buy Now, Pay Later (BNPL) schemes, which have seen an 11.8% rise in use. Interestingly, the growth in online spending isn't due to increased prices—e-commerce prices actually fell by 5.6% in April year-over-year. BNPL spending is projected to reach $84.8 billion in 2024, potentially surpassing the GDP of some small countries. Low- and middle-income households are particularly leaning on BNPL and credit cards to maintain their spending levels, despite the rising debt concerns. Some analysts are wary of the "phantom debt" from BNPL, which isn't fully visible in credit systems, possibly underestimating the economic impact.
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