The Hidden Perils of Buy Now, Pay Later: Unveiling the Phantom Debt Danger Zone

A report by Wells Fargo economists highlights the lack of transparency and oversight in the rapidly growing "buy now, pay later" financing market, which could be concealing a rising consumer debt issue with negative implications for individuals and the broader economy. While the current state of the industry is not seen as a major problem for consumer spending, the report warns that hidden fees and penalties, along with the absence of regulation, could lead to a "phantom debt" problem. The report also notes that buy now, pay later options have seen significant growth, providing increased purchasing power for consumers but potentially leading to excessive debt. The lack of a central repository for monitoring this debt means that traditional measures of household debt may underestimate the actual levels.