"Understanding Consumer Behavior and Risks of Buy Now, Pay Later"

A study by the Federal Reserve Bank of New York examines the use of "buy now, pay later" (BNPL) payment plans by financially fragile and stable households, revealing that financially fragile households use BNPL for frequent, relatively small purchases they might have trouble affording otherwise, while financially stable households use it less frequently and emphasize avoiding interest on credit-financed purchases. The study also shows that financially fragile users make more frequent BNPL purchases of smaller amounts compared to financially stable users, and the reasons for using BNPL vary between the two groups. The findings suggest that BNPL use is particularly attractive to financially fragile households and may continue to grow, with implications for future consumer adoption.