Chief Executive Officer of Qi Research and Chief Strategist Daniel Dimartino Booth identifies where inflation is hit by consumers the hardest to “earn”.
Buy now, pay the decisions for later payment Increased in popularity in the current economy, industry is projected to grow by 12.2% annually to reach $ 122.26 billion this year alone, according to research and markets.
By 2030
The biggest players are affirmative, after salaries and Klarna, which is scheduled to launch an initial public offer on Friday and list his stocks on the Yorkyork Stock Exchange under the Klar symbol.
Companies climbed the importance at a time when Americans were opposes constant inflationHigh interest rates and payments on a student loan, which continued in October 2023 after the break as a result of the Kovid-19 pandemic.
Experts warn hidden risks of buying now, pay later
Consumers used the platforms because they allowed them to pay equal installments for several weeks or months. In many cases, they are also of no interest.
The application from the Swedish payment provider Klarna is seen on a smartphone. (Jonas Waltzberg / Alliance for Image through Getty Pictures / Getty Pictures)
Buy now, payment services later became the main foundation in the retail sector. But it is increasingly integrated into the trip, health and electronics industry, also further catering to consumers seeking flexible funding options.
Online spending on vacation reaches a record $ 222 billion, driven by Buy now, pay later options
The March poll Wallethub revealed that about 55% of Americans used now, pay later (BNPL) services, with 22% currently obliged money to a BNPL provider.
Among those who used the service, 19% had more loans at once in the past year, and 19% suffered late fees or interest after Missing payment.
Klarna app icon on a mobile phone agreed in London, UK, on Thursday, January 21, 2021. (Holly Adams / Bloomberg through Getty Images / Getty Images)
A special research by Bankers found that more than half of the adults who used the service encountered questions such as over -payment, missed payments and remorse.
These findings point out that while BNPL services offer flexibility, they also carry risks depending on how you use them.
“Sometimes, it is a sustainable way to access an acceptable credit and spread the influence of the big purchase. Other times, it’s a ticket for excessive spending,” said senior Bankrat industry analyst Ted Rosman. “We can deceive ourselves to focus on the installments than the total cost of ownership and that can make us spend more than we need.”
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Buy Now, Pay Later Services have been advertised as a “gentler alternative to credit cards” that can come with high interest rates. However, Rosman said the service “behaves more like a credit card over time”. For example, Affirn and Klarna have debit cards that can turn into installments.
Moreover, Rosman explained that the service “is not only four interest -free payments over six weeks, with many of these plans to last longer and charge interest rates similar to credit cards.
In addition, consumers can also be affected by late fees if they do not have the means to cover the installments. Martha Callahan, an authorized financial planner of MBB Capital Partners based in Maryland, has previously told Fox Business that over time, if the consumer pays off payments, they can be easily handed over to a debt collector,
“It is similar to using a credit card where you are now buying it, but when it comes time to pay that debt, if you don’t have the money to make the payment. You are just digging in a deeper financial hole,” Kalahan said, adding that it was can hurt someone’s credit.
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