NEW YORK— Not surprisingly, new research confirms that Americans who are already facing tight finances are more intensive users of buy now, pay later offerings, with the majority of them tapping the short-term installment payment programs five or more times a year.
The research was conducted by the Federal Reserve Bank of New York. ‘
“Financially fragile” individuals, those who have a credit score under 620 or who were declined for a credit application or fell delinquent on a loan in the past year, are more than three times as likely as other, more financially stable, individuals to use BNPL multiple times a year, CNN reported, citing the Fed data.
“Researchers found that almost 60% of financially fragile BNPL consumers have used the installment offerings five or more times a year, with nearly 30% conducting 10 or more BNPL transactions annually. That compares to just over 20% and 10%, respectively, for more financially stable users,” CNN said.
Additional Findings
“More than 62% offinancially fragile BNPL consumers used the programs for purchases under $250, compared to 43.6% of others, according to New York Fed data,” the report continued. “However, those who are more financially stable use BNPL to make larger purchases. They found that 17.3% of financially stable BNPL users financed a purchase between $1,750 and $2,000, versus 4.9% of financially fragile consumers.”
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