Buy now, pay later (BNPL) programs have surged in popularity, allowing consumers to make immediate purchases and pay over time, often without a credit check. In 2022, over 20% of consumers with credit records utilized these services, which appeal particularly to younger individuals or those facing financial strain. While the allure of interest-free payments can provide temporary relief, many users are falling behind on repayments, leading to potential long-term financial consequences. Missing payments can trigger high-interest rates and impact credit scores, as BNPL firms begin reporting to credit agencies. The Federal Reserve has raised concerns about the growing consumer debt, which reached a staggering $18.2 trillion, partly fueled by BNPL usage. Although these programs are now subject to some regulations similar to credit cards, the enforcement of consumer protections has fluctuated with political changes. Consumers are urged to be cautious, as the convenience of BNPL can lead to unmanageable debt if used excessively.
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