A Farewell To BNPL?
Slowly but surely, Americans are breaking bad habits that they developed during the pandemic. Doom scrolling is plenty addictive, but it turns out that the light of day has the same effect on unfounded catastrophic fears as it does on vampires, and the worst-case scenarios that bombard you on your social media feed cannot compete with human interaction. Human gestures of greeting, such as the handshake and the air kiss, are even beginning to make a comeback. The financial hardships of the pandemic era are here to stay for the foreseeable future, however. Many consumers turned to buy now pay later (BNPL) purchases, especially when shopping online, and BNPL providers like Klarna, Affirm, and Afterpay became household names. Much like payday loans, BNPL arrangements are often just another Trojan horse for people with few other options. The unsustainability of the BNPL model appears to be catching up to the major BNPL companies, but only after BNPL debts have caught up to many thousands of consumers. If you are struggling with BNPL debt, contact a Boca Raton debt lawyer.
Is the Buy Now Pay Later Model Sustainable?
BNPL is an attractive option for consumers because it allows them to pay for major purchases, everything from electronics to home appliances and furniture, in small monthly installments over a period of several years. On the surface, making monthly payments on your BNPL purchases looks a lot like making the monthly minimum payment on your credit card, but there are several important differences. BNPL arrangements tend to be interest-free, although they may charge fees for missed payments. Likewise, credit checks are not a prerequisite for making a purchase on a BNPL basis.
What could go wrong? Financial hardships persisted, and prices kept increasing, and soon people were using BNPL to pay for groceries because it was a choice between using their meager paychecks to buy groceries or to make the minimum payments on their existing BNPL obligations.
If Not BNPL, Then What?
The Consumer Financial Protection Bureau (CFPB) has been sounding the alarm on the risks of BNPL for several months, but there are other signs that BNPL may have already had its moment. Affirm recently closed its cryptocurrency unit and reduced its workforce by nearly one fifth. Its stock lost two thirds of its value in less than two years. During the same period, the value of Klarna stock dropped by 85 percent.
With or without BNPL, consumers without a strong credit history remain vulnerable to risky loans, as safer financial products are less available to them. A consumer law attorney can help you disentangle yourself from BNPL debt and other debts you have taken on as temporary solutions to deeply rooted problems.
Work With a Debt Lawyer to Undo the Damage Caused by BNPL Debt
A South Florida debt lawyer can help you if you have been relying on BNPL arrangements and are struggling to keep up with the payments on them. Contact Nowack & Olson, PLLC in Boca Raton, Florida to discuss your case.