NEW YORK—Americans are finding it hard to dig themselves out of debt, and a new research report suggests that the rising popularity of buy now, pay later could push those already struggling into a worse situation.
According to new research from the Federal Reserve Bank of New York, “financially fragile” consumers—defined as those who have a credit score under 620, fell delinquent on a loan, or were declined for a credit application in the past year—were nearly three times as likely as financially stable consumers to use buy now, pay later five or more times last year, Yahoo Finance reported.
Financially vulnerable households were also more prone to rely on the short-term installment loans at a higher frequency to afford smaller, unexpected expenses, Yahoo Finance stated in its analysis.
Millions are Struggling
“The findings come as millions of Americans struggle under the weight of mounting credit card debt and stubborn inflation, with young adults already finding it hard to pay bills on time,” Yahoo Finance said. “(The Fed data) also raised concerns about how broad access to BNPL — which remains largely unregulated — could cause those already struggling to make ends meet to overextend themselves,” Yahoo Finance said.
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