Buy-now-pay-later, or BNPL, financing options are becoming increasingly popular among consumers, particularly those under 45, according to J.D. Power’s latest Banking and Payments Intelligence Report. And that could spell trouble for their financial well-being.
Credit cards, debit cards, and cash are still king among all age groups, the report finds. But younger customers, ages 18 to 44, are “the most enthusiastic adopters of BNPL services.” They have more accounts, on average, than older consumers. Plus, the millennials and Gen Zers signing up for these services are more likely to blow their budgets using them, and to miss payments.
Young people report using BNPL to avoid the high interest associated with credit cards—and that’s a good thing, says John Cabell, director of banking and payments intelligence at J.D. Power and the author of the report. But “they are often not paying off their buy-now-pay-later charges in a timely fashion, so they end up paying interest” anyway.