J.J. McCorvey is a business and economy reporter for NBC News.
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.
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
usage soars, financial experts and researchers have raised alarms about risky spending on the platforms, even though they can often be used responsibly. “I’m sure there are people who use it well, but on average, we feel it kind of replaces the credit card,” said Ben Lourie, an accounting professor at the University of California, Irvine. “People are consuming extra. There’s just no way around it.
users had higher credit card utilization rates and lower credit scores than non- services for designer clothes, handbags and Apple devices, Amy Baird, 39, was staring down more than $9,000 in debt. “It caught up to me,” said Baird, who lives in Dallas and works as a claims clerk for an insurance company. “I had put myself in a pretty big hole,” she said, adding that she found support in a subreddit focused on shopping addiction. Her boyfriend helped her secure a low-interest balance transfer card, making it easier to tackle the loans one provider at a time, she said.
services are set up in ways that can feed habits his clients are working to break. “You don’t really have to do anything other than click ‘purchase,’” he said. That frictionlessness can be especially tempting “on days when people are tired or stressed and you just have less willpower,” said Mahoney, who works mainly with millennial consumers.
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