Will Pay Later Services Have To Pay After The Holidays?


For the past few years pay-later apps and debit card options have given the consumer the opportunity to let their “hair down.” Pay-later services like After Pay, Affirm, Klarna and more have given you the option of financing the cost of your order over time with buy now, pay later. Snoop Dogg Is Now The Official Owner Of Death Row

Buy Now Pay Later (BNPL), also known as point-of-sale loans, is similar to the layaway method. Therefore, you can go shopping at the mall and be offered the option to split up your payments.

The theory is ideal, but what does this do to the consumer? When utilizing these apps your accepting whatever terms and interests rates that apply, similar to financing a car, or a personal loan.

This industry is fairly new and has yet to form any regulations which brings about concerns for financial institutions and retailers. BNPL options aren’t offered prior to making a purchase, but will appear as an option on qualifying purchases at checkout.

BNPL service’s have sky rocketed since the pandemic and even more so during the holidays, but given the current economical structure it’s safe to say that a large percentage of consumers are most likely to fall short of repayment due to debt and excessive use of the service.

Despite the 0% interest options, this option may not last the life of the loan, subsequently inviting expensive finance charges down the line with sky-high penalties if a payment is missed. These third party investors have attached a fixed fee to the monthly payments invaliding the purpose of the whole ideology.

Though paying on time doesn’t impact your credit score, however late payments are reported to the credit bureaus.

According to the Quarterly Report on Household Debt and Credit, the total household debt has increased by $286 billion (1.9%) to $15.24 trillion in the third quarter. In October, consumer credit increased at a seasonally adjusted annual rate of 4.6 percent. Revolving credit increased at an annual rate of 7.8 percent, while nonrevolving credit increased at an annual rate of of 3.7 percent, said Board of Governors of the Federal Reserve System.

The aftermath of the pandemic has left many Americans strapped for cash, struggling to meet payment exposing financial institutions and retailers to potential risk.


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