Is it easy to get into debt?

0

LAS VEGAS (KLAS) – Rising prices have prompted shoppers to look for alternative payment methods for their everyday purchases. That’s a concern for consumer advocates who say the surge in use of “buy now, pay later” services leaves them wondering just how much debt Americans are getting into.

“I think a big part of its rise is people leaning into it, like credit cards at times when they find themselves a little light on cash,” said Nathan Grant of moneytips.com.

Grant says BNPL’s typical consumers are younger, mostly Gen Z and Millennials. They use these services to split a purchase into four or more installments over a period of weeks or months.

These services are usually offered with zero or minimal interest and often come without a credit check.

While other household debt, such as credit card spending and auto loans, is collected and tracked by the Federal Reserve, “buy now, pay later” data is not included because non-bank sources provide usually funding.

“You don’t get any benefit from it, these payments don’t help you, they don’t get reported to Experian or Transunion, and don’t see the credit report reflected positively,” Grant said.

Despite its rapid growth, some experts worry that users are getting into debt quite easily without realizing it.

“But I would say any financial deal you make with a loan, short-term loans, you want to read the fine print, make sure you know everything you’re getting into,” Grant said.

The three major credit bureaus have said they will begin including buy-it-now, pay-later activity on credit reports, but they still have to rely on vendors for that information.

The Consumer Financial Protection Bureau plans to address these concerns and expects to release its findings later this year.

Share.

Comments are closed.