Buy Now, Pay Later Is Not a Boom, It's a Bubble, Harvard Researcher Says

Since the start of the coronavirus pandemic, installment payments have exploded in popularity along with a general surge in online shopping.

"It's hard to buy anything anymore without being asked if you want to pay over time," said Marshall Lux, a fellow at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School.

These days, most consumers will see a buy now, pay later option when shopping online at retailers like Target, Walmart and Amazon, and many providers are introducing browser extensions, as well, which you can download and apply to any online purchase. Then there are the apps, which let you use installment payments when"Three years ago, people talked about Peloton bikes, now people are buying sneakers, jeans, socks," Lux said.

In addition, BNPL's rapid growth is driven primarily by younger consumers, with two-thirds of BNPL borrowers considered subprime, Lux noted, making them especially vulnerable to economic shocks or a possible downturn.

Gen Zers are more likely to miss a payment and tap BNPL for everyday purchases rather than big-ticket items, according to a separateGenerally, if you miss a payment there could be late fees, deferred interest or other penalties, depending on the lender. (CNBC's

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