Many consumers find buying now and paying later a godsend when cash is tight. Others are wishing they’d paid upfront to avoid pain later.
Tia Whiteside, 27, knew she was spending more than she would have without buy now, pay later services — the popular loans that let borrowers split purchases into installments with little or no interest. Planning a day trip to the beach with her 2-year-old son last year, she spent $800 on Amazon purchases including a tent, new outfits and a high-end sandcastle kit with the BNPL provider Affirm.
Whiteside, a Greenville, South Carolina-based behavioral analyst who treats childhood autism, makes good money; she and her husband bring in about $110,000 per year combined. But the $6,000 in BNPL loans she’d racked up over roughly two years felt frivolous, she said, especially because they’re planning to buy their first home.
“I was just seeing my paycheck continually eaten up,” said Whiteside, “and I was like, ‘Where’s my money going?’”
I was just seeing my paycheck continually eaten up, and I was like, ‘Where’s my money going?’
Tia Whiteside, 27, Greenville, S.C.
The last straw was a $600 Dyson hair styler and dryer, which she’s used just once since purchasing it with Affirm at Neiman Marcus in early February. By mid-March, Whiteside said she’d deleted the Klarna and Afterpay apps from her phone — but held on to Affirm, because she still owes it money.
BNPL services have taken off among shoppers across income and credit levels for various reasons. Many are seeking cover from high credit card interest rates. Some, having burned through traditional credit options, are desperate for financial lifelines. Others are simply looking to better manage their cash flow.
The fastest uptake has been among consumers 35 and younger, who represent more than half of BNPL borrowers, LexisNexis Risk Solutions found late last year. Many are increasingly using the loans for daily essentials, not just big-ticket purchases. While…
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