Buy Now, Pay Later popular among younger, poorer consumers

The study found that those using BNPL were likely to have lower credit scores and higher debt from other sources than most consumers. Image (c) ConsumerAffairs

Study casts light on the borrowing habits of indebted consumers

More than one-fifth of consumers used Buy Now, Pay Later (BNPL) loans in 2022, with many of these borrowers having low credit scores, according to . a study by the Consumer Financial Protection Bureau.

The study also found that most BNPL borrowers had multiple loans at once, with one-third borrowing from different providers. BNPL borrowers were also more likely to have higher balances on other types of credit like credit cards.

BNPL is a payment option that lets consumers split purchases into smaller installments, often without interest. It’s advertised as a safer alternative to credit cards and a way to help those with limited or poor credit.

The study found that in 2022:

  • 21.2% of consumers used BNPL, an increase from 17.6% in 2021.
  • 63% of BNPL borrowers took out multiple loans at the same time.
  • Most BNPL loans went to people with subprime credit scores.
  • BNPL borrowers had higher balances on other credit accounts.
  • Younger borrowers (ages 18-24) used BNPL loans for 28% of their total consumer debt, much higher than the 17% average for all age groups.

This study helps shed light on the growing BNPL market and its impact on consumer debt.