Financial expert warns young Americans against ‘buy now, pay later’ plans as shopping tactic growing in popularity

Are “Buy Now, Pay Later” Plans a Wise Financial Decision?

There has been a surge in the popularity of “buy now, pay later” (BNPL) plans among young Americans, but not everyone is convinced of their financial wisdom.

Personal finance influencer Haley Sacks, with over a million followers online, raised concerns about BNPL plans on “Fox & Friends,” labeling the practice as “predatory.”

Sacks advised against using BNPL altogether, suggesting that if financing is needed, credit cards with 0% interest “pay over time” options are a better choice.

She pointed out that credit cards offer benefits such as consumer protection and credit building opportunities that BNPL plans lack.

BNPL services allow buyers to split purchases into installments instead of paying the full amount upfront, but missing payments can result in late fees.

BNPL transactions are expected to reach record volumes this year, initially promoted as safer alternatives to credit cards. However, financial experts caution that overreliance on these plans can lead to overspending and debt accumulation if not managed properly.

A recent LendingTree survey revealed that more Americans are using BNPL for essential items like groceries, with 40% admitting to missing payments in the past year.

Factors contributing to the shift towards BNPL include rising prices, high interest rates, and the resumption of student loan payments post-COVID-19. Sacks believes these deferred payment options appeal to financially struggling young generations.

“Gen Z is grappling with inflation and stagnant wages, making BNPL a way to access desired items, albeit at a cost,” she explained.

According to the LendingTree survey of 2,000 consumers aged 18 to 79, nearly half of American adults have used BNPL services like Klarna or Affirm, with Millennials being the largest users, followed closely by Gen Z and Gen X.