The pandemic has upended many aspects of our lives, including the way we shop and pay for groceries. With inflation driving up prices and squeezing household budgets, more Americans are turning to buy now, pay later (BNPL) apps to make ends meet. These apps offer instant credit, allowing consumers to spread out their payments over time. However, while BNPL apps can be a convenient way to manage short-term cash flow issues, they can also lead to deeper debt problems in the long run.
The rise of Buy Now Pay Later apps
BNPL apps have been around for a few years, but they have gained significant traction during the pandemic. Companies like Affirm, Afterpay, and Klarna allow consumers to purchase goods online or in-store and split the cost into smaller, interest-free payments over time. This can be an attractive option for people who are struggling to make ends meet, as it allows them to spread out their payments and avoid taking on more debt through traditional credit cards.
The downside of BNPL
While BNPL apps can be a lifeline for people who are struggling financially, they can also lead to deeper debt problems. For one thing, these apps often have higher fees and interest rates than traditional credit cards, especially if you miss a payment. Additionally, BNPL apps can encourage people to overspend, as the smaller, more manageable payments can make purchases seem more affordable than they actually are.
The impact of inflation
With inflation on the rise, more Americans are turning to BNPL apps to help make ends meet. According to a recent survey by Credit Karma, nearly 40% of Americans have used a BNPL app in the past year. Of those, 26% said they did so because they couldn’t afford to pay for their purchases upfront.
Bankruptcy as a solution
For those who find themselves struggling with debt, bankruptcy can be a viable option for getting back on track. Bankruptcy allows individuals to discharge most of their unsecured debt, including credit card debt, Buy Now Pay Later debt and personal loans. While bankruptcy can have a negative impact on your credit score and make it harder to get credit in the immediate future, it can also provide a fresh start and a path to financial stability.
However, bankruptcy should not be taken lightly. It can have consequences and should only be pursued after careful consideration and consultation with a bankruptcy attorney. BNPL apps can be a convenient way to manage short-term cash flow issues, they can also lead to deeper debt problems in the long run. With inflation squeezing budgets and more Americans turning to BNPL apps to make ends meet, it’s important to be mindful of the potential pitfalls of these apps and to seek out help if you find yourself struggling with debt. Whether through bankruptcy or other means, there are options available for those who need help getting their finances back on track.