Buy now, pain later? Study finds installment programs hurt the average shopper

Anyone who has shopped online in the past few years has encountered one of the many short-term financing options known as buy now, pay later at checkout. And though they may sound enticing, hidden risks uncovered by researchers suggest that buy now, pain later might be a more apt label.

According to a study recently highlighted by the Stanford Graduate School of Business, use of BNPL programs can result in negative financial consequences for the average user, with effects ranging from overdraft charges to interest incurred on credit card balances.

The team behind the paper analyzed the bank and credit card histories of 10.6 million Americans between 2015 and 2021 and examined changes in people’s financial well-being after making a purchase with BNPL. It also compared the data of more than 570,000 pairs of BNPL borrowers and similar non-borrowers.

 

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