‘Buy now pay later’ plans may cause consumer and credit card debt to rise


An Afterpay logo is seen displayed on a smartphone.

Igor Golovniov | SOPA Images | LightRocket | Getty Images

“Buy now, pay later” options are becoming increasingly popular, but analysts warn of default risks given the lack of credit checks and “opaque” debt reporting. 

Not being able to check on consumers’ credit history could lead to lenders to underestimate borrowers’ debt levels when assessing new loan applications, they said. There’s also the risk of consumers chalking up more credit card debt in order to pay off their “buy now, pay later” (BNPL) obligations, analysts warned.

BNPL providers usually tie up with retailers — both online and in stores — to offer consumers the option…


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