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Monday, February 26, 2024

Youth in USA getting trapped in debt with ‘buy now, pay later’ scheme

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The youth in the USA are getting enticed in the trap of debt because of the ‘buy now, pay later’ (BNPL) scheme and their sibil score is deteriorating as well. Post the COVID-19 pandemic, such companies providing small loans have increased, and in the greed of attractive and easy conditions of debt and it being interest free, the youth are spending more than their income. According to a survey of the Financial Technology Association, 40% of the BNPL users take loans from many companies, and almost 1/3rd of them spend more than their income and are unable to pay the loan back.

As per a report of the Federal Reserve, in 2021, 18% of the users from the age group of 18-29 could not pay the loan amount back, and 11% were late in paying back at least one instalment.

The Consumer Financial Protection, in its report, has said that in 2021, 5 BNPL companies provided a loan of a total of around 2 lakh crore rupees to 18 crore people, which was 10 times more than 2019. People are still not aware of the hidden dangers associated with BNPL.

Sonakshi Datta
Sonakshi Datta
Journalist who wants to cover the truth which others look the other way from.

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