Buy now, pay sputers plans offer an attractive alternative to credit cards for consumers: they enable purchases to be divided into short-term, usually interest-free installments.
“Credit is not new. There have been credit for thousands of years and credit cards are not new. However, it has a hard time adapting to the needs of consumers,” said Michael Linford, Chief Operating Officer from Affirm. “I think what we see in the industry is the widespread takeover of alternatives to credit cards.”
An estimated 86.5 million Americans who have now used purchase purchase pay later loans in 2024, and this number could increase to 91.5 million in 2025. A recently carried out LendingTree survey showed that almost half of the Americans have now used a purchase costs for a later service such as affirm or Klarna, including 11%, which used at least six times at least 11%.
“I think it expresses parts of the credit card industry,” said Moshe Orenbuch, Senior Analyst at TD Cowen. “Buy now, pay later was created for people who either didn't want to use credit cards or didn't have much open [credit] to buy on your credit cards. “
“Every purchase that is now financed by purchase is a purchase that could have been financed via a credit card or a checking account that you can now offer,” said Kevin King, Vice President for Credit Risk and Marketing Strategy at Lexisnexis Risk Solutions. “Therefore, it reduces card transaction activity and use – these are important income drivers.”
Later loans for credit cards are equipped with the direct challenge that now buy. Large banks and financial institutions have other reasons to be careful with consumers who use these plans, especially if the number of users continues to grow.
“Buy now, later a huge black hole in the loan profile and your understanding of the quality of the consumer loans,” said King.
Watch that video Above to find out what is now behind the popularity of purchase, pay later loans and why traditional lenders such as banks and credit card companies are careful with consumers who use these programs.