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As the holiday season approaches, shoppers are taking advantage of âbuy now, pay laterâ (BNPL) services to spend more than they can afford up front. According to a recent Cardify report, around 45% of shoppers plan to use BNPL’s services to spread their vacation spending.
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âIt has become more common,â said Derrick Fung, CEO of Cardify, according to CNBC. âOver the past 12 months, the consumer has become more compulsive and BNPL products are the result of us being locked in for too long and wanting more instant gratification. “
A growing number of retailers are offering buyers the option of purchasing a product and paying for it in equal installments. A survey carried out in August by Credit Karma shows that 44% of Americans have used BNPL’s services. Of those who used BNPL’s services, 34% fell behind on one or more payments. Missing a payment could result in late fees, deferred interest or other penalties depending on the lender, CNBC added.
Cardify also noted that the installment purchase may cause consumers to spend more than they can afford. Cardify found that almost 46% of buyers would spend less if BNPL was not an option.
A separate report from Oxygen also shows that 56% of buyers made a purchase with BNPL that they couldn’t afford, CNBC said, and 43% said if an expensive item had a BNPL option, they would be more likely to make a purchase.
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Find: How to resist the temptation to spend too much on vacation
The Consumer Financial Protection Bureau has warned that while BNPL may be a tempting option, consumers should not stretch too far financially to take advantage of these offers.
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