An expert recommends reading the terms and understanding what you're getting into From alicjawithaj
May 3, 2023 at 6:40 p.m.Some experts are urging consumers to be wary of the financial consequences of using buy now, pay later plans, particularly for everyday purchases.
According to the FIS WorldPay's Global Payments report, BNPL represented approximately 6 per cent of all e-commerce payment methods in Canada in 2022, double the amount of BNPL e-commerce spending in 2021. "It can make it very easy to borrow money, without giving the chance for consumers to consider the consequences of entering into that commitment," Goulard said in an interview with"It's always been easy with credit cards, but BNPL gives the impression that it's almost free money in a sense, which is not the case."
It can be the beginning of a slippery slope when people are using them for small, everyday purchases.”The rapid rise of BNPL, particularly through the COVID-19 pandemic, prompted the Financial Consumer Agency of Canada to launch a pilot study into the service in 2021. Although the survey was not statistically significant due to its small sample size, FCAC noted that BNPL users tended to be younger, with the largest group being between 18 and 44 years of age.
While there are limited recent data in Canada about how BNPL plans are being used, new data from the United States could provide a clue into consumer habits when it comes to these short-term loans. A recent study from the U.S. Consumer Financial Protection Bureau says the average loan amount for BNPL plans is $135 over six weeks, compared to $800 for traditional loan instalments over a period of between eight and nine months.
"Like anything else, be it a credit card or other loan, you want to read the terms and really understand what you're getting into. And if you're finding yourself shopping more than you would without it, maybe it's time to close your account."
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