Many buy now, pay later, users would prefer this offer through their bank, study finds

Buy now, pay later Users said they would prefer to use a similar offer through their bank, according to a recent survey. (iStock)

Buy Now, Pay Later (BNPL) options are on the rise as more consumers look to pay for their purchases in smaller monthly installments. However, more than 70% of BNPL users said they would be more interested in using BNPL products backed by their banks, rather than fintech groups, according to a researcher. new investigation from fintech provider PYMTS and Amount.

The survey measured interest in BNPL products offered by banks based on factors such as income brackets and generations of consumers. Among those who showed interest in this type of BNPL option, 60% of millennials and 54% of Gen Z, according to the survey.

Fintech providers Afterpay, PayPal and Klarna currently control the top three market shares in the BNPL market, according to the Consumer Bankers Association.

If you are interested in financing but unsure of BNPL’s options, you may consider taking out a personal loan while interest rates are low. Visit Credible to find your personalized interest rate without affecting your credit score.

APEXX GLOBAL, INTERNATIONAL SUPPLIER OF BNPL, LAUNCHES IN THE UNITED STATES

Regulators review risk of BNPL programs

BNPL is a payment option that allows users to pay for their purchases in monthly instalments. These payments are generally interest free, as long as they are made before the due date. But late fees are often added if buyers don’t make their payments on time.

And the market for this product is growing, with consumers expected to have used BNPL to make an estimated $100 billion in retail purchases in 2021, according to Search Cornerstone Advisors published by Forbes. That’s significantly higher than previous years, with $24 billion in 2020 and $20 billion in 2019.

However, as its use expands, questions have begun to arise about its risk. The Consumer Financial Protection Bureau (CFPB) recently launched an investigation into the use and security of BNPL programs.

BNPL’s products do not provide consumers with the standard protections required of credit card providers or other regulated lenders, and their opacity regarding fees and repayment terms could easily put unwitting consumers into harmful debt and unaffordable,” said Mike Calhoun, president of the Center for Responsible. Loan (CRL), said in a statement. “Regulators should ensure that BNPL lenders only grant loans after determining the repayment capacity of the borrower.”

If you need help paying for a major purchase, you can also consider taking out a personal loan. Visit Credible to compare multiple lenders at once and choose the one with the best interest rate for you.

CFPB LAUNCHES INVESTIGATION INTO BUY NOW, PAY LATER CREDIT PROGRAMS

BNPL could increase financial debt burden

When it opened its investigation in December, the CFPB expressed concern that BNPL’s programs allowed consumers to accumulate debt quickly and lacked a sufficient credit check to determine their ability to repay or meet scheduled payments.

“Unaffordable credit can provide a quick influx of cash, but over the longer term – which in BNPL’s case might just be a few weeks or months down the road – unregulated fintech products can add to the burden from already debt-burdened consumers,” Calhoun said. “Now is the time for regulators to rein in the BNPL.”

If you have outstanding debt, a personal loan could help you consolidate it and pay it off at a lower interest rate. Contact Credible to speak with a loan expert to get all your questions answered and see if this is the right option for you.

You have a financial question, but you don’t know who to contact? Email the Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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