Marie Coronel is the proud daughter of Filipino parents. Marie grew up in South San Diego and graduated from Eastlake High School in Chula Vista.
SAN DIEGO -- As the trend of 'Buy Now, Pay Later” becomes increasingly popular among consumers, financial experts caution young shoppers to carefully consider the implications before committing to these payment plans.
BNPL allows consumers to purchase items or services upfront and split the total cost into several payments. Dan Roccato, a clinical professor of finance at the University of San Diego, describes it as a modern twist on the traditional layaway plan.'They don't have access to credit, so this is an easy way or an easier way to get goods and services today that they otherwise wouldn't be able to afford,' said Roccato.Despite the immediate financial flexibility that BNPL offers, recent developments suggest potential risks for consumers' credit health. FICO, the agency responsible for calculating credit scores, announced plans to incorporate BNPL transactions into its reporting system.Roccato highlights that while this could help some consumers build their credit, it could also lead to credit damage if payments are not made on time.'If we don't pay that bill on time for whatever reason, that can damage our credit score and that could haunt us for many years to come, not just getting credit but the price that we pay for that credit on our next car loan, our next student loan,' Roccato explained.A recent study by LendingTree, an online lending marketplace, found that 41 percent of BNPL users have made late payments. Furthermore, about one in four users have three or more BNPL loans simultaneously.Alarmingly, many consumers are not using these loans for essential purchases; the most common items bought include clothing or jewelry, laptops or gaming systems, and home decor or appliances.Before opting for a BNPL plan, Roccato urges consumers to thoroughly understand the terms and ensure they can meet payment deadlines.'Think it through before you click on that button because at the end of the day you are essentially borrowing money, and if you don't pay it back on time, that has long term negative implications,' he advised.As the appeal of flexible payment options grows, consumers are reminded to remain vigilant to protect their financial futures.This story was initially reported by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.”
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