This article explores the potential financial risks associated with 'buy now, pay later' (BNPL) services, despite their seemingly attractive offers.
The allure of a $100 monthly payment for an $800 couch over eight months with zero percent interest is undeniable. It seems like a convenient way to spread the cost, keeping extra cash in your pocket. But research warns this 'buy now, pay later' ( BNPL ) approach can lead to financial headaches compared to paying upfront. \These tempting offers, often seen online, allow you to avoid charging the entire amount to your credit or debit card.
While it appears harmless, spreading payments without penalties can create a dangerous illusion of affordability. Experts point out that this can lead to mounting financial pressure as those seemingly small monthly payments accumulate over time. \Professor Darrin Duber-Smith, a marketing expert at Metropolitan State University of Denver, draws parallels between BNPL and the traditional layaway system. Studies, including one by the Harvard Business Review, show that consumers using BNPL services are more likely to make purchases and buy more items. This trend persists for months, suggesting a shift in consumer behavior driven by the perceived convenience of affordable installments. \Interestingly, lower-income individuals seem particularly drawn to BNPL options. The Harvard Business Review study indicates that these services offer a sense of control over budgeting, making costs seem more manageable. However, this perception of control can backfire, leading to overborrowing and financial strain as those small payments quickly add up. Duber-Smith warns that the primary issue lies in overspending driven by the ease of BNPL financing
Buy Now Pay Later BNPL Financial Advice Budgeting Overspending
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