PAYPAL PAY IN 4 STEAM PLUS
Here are five of the biggest potential pitfalls for consumers who use buy now, pay later loans, plus tips for safer alternatives and suggestions for long-term fixes to make the services work better for consumers. “It allows the possibility that consumers could overextend themselves with too many loans, and leave them with little meaningful recourse if they face problems with purchases, repayments, or incorrect information reported to the credit bureaus.” “Consumers are choosing buy now, pay later as a competitive alternative to high-interest credit products that trap them in cycles of debt,” she said in a statement.īut Chuck Bell, who focuses on consumer financial services at CR and authored a new analysis of the buy now, pay later industry, says that this lack of regulation distinguishes buy now, pay later companies from more tightly controlled traditional banks and credit card firms. Penny Lee, CEO of the Financial Technology Association, an industry group that represents the buy now, pay later firms, says that the loan products give people clear benefits. This prompted the CFPB to recently issue a report detailing how these services, which are not currently well-regulated, can harm consumers. For example, 28 percent of people who have used a buy now, pay later service report having had at least one problem, including being overcharged on a purchase and having difficulties returning products or getting refunds. Problems were more likely among frequent users of the programs: CR’s survey found that almost a one in five of people juggling four or more of the loans missed a payment-roughly twice the rate of people with fewer buy now, pay later loans.Īs consumers’ use of Afterpay, Affirm, Klarna, Sezzle, Zip, and similar services has skyrocketed, complaints about them to the CFPB and Better Business Bureau have also surged. Still, CR’s survey and other research raise some red flags. They may also be a good option for people who don’t currently have a credit card, something that was true for 4 percent of people in CR’s survey. And shoppers find that getting approved for a loan can be fast and easy, often without the kind of “hard” check on their credit report that could ding their credit score by a few points. Buy now, pay later services typically offer no-interest, short-term loans and sometimes charge no fees, even on late payments. Most people who use the services are happy with them, CR’s survey found: Among the 2,013 buy now, pay later users in our survey, almost 90 percent said they are somewhat or very satisfied, and a similar number said they would probably or definitely use the service again.Īnd it’s easy to see the attraction. That’s up from just 18 percent in January of this year, when CR last asked about these kinds of loans (PDF). Consumers’ use of “buy now, pay later” or “pay-in-4” services-short-term loans for individual purchases, usually offered online at the point of sale-is exploding: Twenty-eight percent of Americans have paid for clothing, electronics, appliances, or other goods this way, according to an August 2022 Consumer Reports nationally representative survey of 6,539 U.S.
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