Consumer Use of Buy Now, Pay Later: Insights from the CFPB Making Ends Meet Survey
This report explores the consumer financial profiles of Buy Now, Pay Later (BNPL) borrowers using the Bureau’s Making Ends Meet survey and its association with credit bureau data. While many BNPL borrowers who we observed used the product without any noticeable indications of financial stress, BNPL borrowers were, on average, much more likely to be highly indebted, revolve on their credit cards, have delinquencies in traditional credit products, and use high-interest financial services such as payday, pawn, and overdraft compared to non-BNPL borrowers. BNPL borrowers had higher credit card utilization rates and lower credit scores. However, many differences between BNPL borrowers and non-borrowers pre-date BNPL use. Further, contrary to the widespread misconception, BNPL borrowers generally have access to traditional forms of credit. In fact, they were more likely to borrow using credit and retail cards, personal loans, student debt, and auto loans compared to non-BNPL borrowers. Finally, the report estimates that a majority of BNPL borrowers would face credit card interest rates between 19 and 23 percent annually if they had chosen to make their purchase using a credit card.