According to a recent Achieve study, one way to make ends meet with your BNPL account is to track it. (iStock)
Recent research shows that while more consumers are using buy now, pay later (BNPL) services and are attracted to their ease of access, they are at risk of overusing them. I am.
According to Achieve, more than a third of respondents (34%) like BNPL services because they can pay for purchases over a long period of time without paying interest, and 22% use credit card. They said they liked this option because it was easier to access. investigation. Additionally, 76% said their BNPL helped improve their overall financial situation.
BNPL providers partner with retailers to allow shoppers to spread the cost of their online purchases into multiple installments at checkout. One of the attractions is that installments, which typically begin within a few weeks of purchase, are interest-free. Plus, this payment option doesn’t require a credit check or down payment, like credit cards and layaways do.
However, research shows that BNPL is sometimes used by consumers with poor credit histories who are already under debt stress. Furthermore, 78% of respondents said that using BNPL is prone to overextension.
“Buy now, pay later is not an inherently flawed financial product,” said Brad Stroh, co-founder and co-CEO of Achieve. “However, as with other forms of credit, consumers must use credit responsibly and only borrow what they can repay. Lenders should also be aware of the potential damages inherent in borrowers and BNPL products. , must be considered responsibly and intentionally.”
BNPL is just one alternative to credit cards. If you need financing for a big purchase, a personal loan can be a good option. Visit Credible to find an interest rate that’s right for you without affecting your credit score.
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BNPL delivers better financial outcomes than credit cards
Failure to pay your BNPL may result in late fees and other penalties. Research shows that financially well-off consumers using BNPL products showed more signs of debt stress, such as higher debt levels and lower credit scores, compared to consumers who did not use BNPL products. That’s what it means. However, only 16% of respondents said they had incurred late fees for missing a BNPL payment, and 20% said they had been charged interest on a BNPL transaction.
moreover, Separate investigation BNPL provider Klarna says consumers who rely on BNPL have had better outcomes than traditional credit card users. Approximately 96% of Klarna’s US BNPL customers pay early or on time, ahead of his 41% of monthly revolving credit card users. In 2023, 31% of customers paid their bills early, 65% paid on time and only 4% incurred late fees using Klarna’s interest-free Pay in 4 option. Conversely, 41% of American credit card users carry debt each month.
“There are still too many traditional banks and credit card companies pushing products onto consumers with exorbitant interest rates, hidden fees and revolving debt,” said David Sykes, chief commercial officer at Klarna. “It is clear that the traditional credit card model does not work favorably for the majority of customers.”
If you have ‘buy now, pay later’ debt and need help paying it off, a personal loan may be able to help. Visit Credible to compare multiple personal loan providers at once and choose the one with the best interest rate for you.
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3 ways to effectively manage BNPL debt
More than half (56%) of Achieve survey respondents said that tracking multiple BNPL transactions takes a lot of effort. Maintaining a running list of all outstanding BNPL transactions is one way to stay ahead of debt management.
Achieve encourages consumers to record each transaction, the name of the BNPL provider, the number of payments remaining, the amount paid, and the payment method. Consumers should also consider BNPL products like any other form of credit, spending within limits and keeping repayment plans in mind before making large purchases. You should also choose automatic payments to avoid late fees if you miss a payment.
Achieve says, “When possible, pay from your checking account rather than your credit card to avoid accruing interest later on these purchases. However, make sure you have enough funds to cover your monthly payments to avoid overdrafts.” Please make sure it is in your account at all times.”
If you’re looking for another form of credit to finance a large purchase, consider using a personal loan. Visit Credible to find the best interest rates and financing options for your needs.
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