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.