Buy now, pay later comes with risks warned by experts

Buy Now, Pay Later Decisions for Payment According to scientific research and markets, according to popularity in the current economy, this year the industry will grow by 12.2%to reach $ 122.26 billion, reports research and markets.

By 2030, the United States is now buying, paying later the market, allegedly reaching $ 184.05 billion.

The main players are Affert, AfterPay and Klarna, who plan to launch the initial public offer on Friday and list their shares on the New York Stock Exchange under the symbol “Klar”.

Companies became known at a time when Americans were To the right in sustainable inflationHigh interest rates and payments of student loans that resumed in October 2023 after a pause due to the COVID-19 pandemic.

Experts warn the hidden risks of buying now, pay later

Consumers used platforms because they allowed them to pay in equal installments for weeks or months. In many cases, they are also without interest.

The Klarna’s Swedish Payment Supplier app is visible on the smartphone. (Jonas Walzberg / Picture Alliance through Getty Images / Getty Images)

Buy now, payments of later services have become the basis in the retail sector. But this is increasingly becoming integrated into travel, health and electronics, which is even more serviced by consumers who seek flexible financing options.

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In March, Wallethub showed that about 55% of Americans used the purchase now, paying later (BNPL), with 22% now – the money supplier BNPL.

Among those who took advantage of the service, last year 19% received several loans at once, and 19% carried late fees or interest after Not enough payment.

On Thursday, January 21, 2021, Klarna app icon on a mobile phone located in London. (Holly Adams / Bloomberg via Getty Images / Getty Images)

A separate Bankrate poll showed that more than half of the adults who used services that have faced problems such as cost exceeding, missed payments and remorse of the buyer.

These conclusions emphasize that while BNPL services offer flexibility, they also take risks depending on how you use them.

“Sometimes this is a viable way to access an affordable loan and spreading the impact of a big purchase. Other times it is a cost ticket,” said Bankrate Senior Analyst Ted Rossman. “We can deceive ourselves in the orientation for installments, not the total value of the property, and it can make us spend more than we need.”

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Later, they pay later, payment services advertised themselves as “a more delicate alternative to credit cards”, which may have high interest rates. However, Rossman said the service “behaves more like a credit card over time.” For example, Klarna claims debit cards that can be transformed into installments.

In addition, Rossman explained that the service “is not only four payments without interest for six weeks, and many of these plans lasts longer and charges interest rates similar to credit cards.

In addition, consumers can also suffer from late payments if they do not have the funds to cover installments. Martha Kalahan, Certified Financial Planner FBB Capital Partners based in Maryland

“It’s like using a credit card where you are making a purchase now, but if it’s time to pay this debt when you don’t have cash to make the payment. You just dig yourself into a deeper financial hole,” Kalahan said, adding that Can hurt someone’s merit.