Many buy now, pay later users would prefer this offering through their bank, study says

Buy now, pay later (BNPL) options are on the rise as more consumers look to pay for their purchases in smaller, monthly installments. However, more than 70% of BNPL users said they would be more interested in using BNPL products backed by their banks, rather than fintech groups, according to a new survey from fintech provider PYMTS and Amount.

The survey gauged interest for bank-offered BNPL products based on factors like consumers’ income brackets and generations. Among those who showed an interest in this type of BNPL option were 60% of millennials and 54% of Gen Z, according to the survey. 

Fintech providers Afterpay, PayPal and Klarna currently control the top three market shares in the BNPL market, according to the Consumer Bankers Association.

If you are interested in financing but are unsure about BNPL options, you could consider taking out a personal loan while interest rates are low. Visit Credible to find your personalized interest rate without affecting your credit score.

INTERNATIONAL BNPL PROVIDER APEXX GLOBAL TO LAUNCH IN US

Regulators examine risk of BNPL programs

BNPL is a payment option that allows users to pay for their purchases in monthly installments. These payments are usually interest-free, as long as they're made by the due date. But late fees are often added if buyers do not make their payments on time. 

And the market for this product is growing, with consumers expected to have used BNPL to make about $100 billion in retail purchases in 2021, according to Cornerstone Advisors research published by Forbes. This is significantly higher than in previous years, with $24 billion in 2020 and $20 billion in 2019. 

However, as its usage grows, questions have begun to surface about its risk. The Consumer Financial Protection Bureau (CFPB) recently opened an inquiry about the usage and safety of BNPL programs. 

"BNPL products do not offer the standard consumer protections required of credit card providers or other regulated lenders, and their opacity regarding fees and repayment terms could easily place unwitting consumers into harmful, unaffordable debt," Mike Calhoun, the president of the Center for Responsible Lending (CRL), said in a statement. "Regulators should ensure that BNPL lenders make loans only after determining the borrower’s ability to repay."

If you need help paying for a large purchase, you could also consider taking out a personal loan. Visit Credible to compare multiple lenders at once and choose the one with the best interest rate for you.

CFPB OPENS INVESTIGATION INTO BUY NOW, PAY LATER CREDIT PROGRAMS

BNPL could be adding to financial debt burden

When it opened its investigation in December, the CFPB expressed concern that BNPL programs allowed consumers to quickly accumulate debt, and lacked a sufficient credit check to determine their ability to repay or meet the scheduled payments. 

"Unaffordable credit may provide a quick inflow of cash, but over the longer term – which, in the case of BNPL, can be just a few weeks or months down the road – unregulated fintech products can add to the debt burden of consumers already overextended by debt," Calhoun said. "The time for regulators to rein in BNPL is now."

If you have outstanding debt, a personal loan could help you consolidate and pay it down at a lower interest rate. Contact Credible to speak to a loan expert to get all of your questions answered and see if this is the right option for you.

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