Buy now, pay later plans have emerged as a popular alternative to traditional credit cards for consumers. These plans allow shoppers to divide their purchases into interest-free installments, providing greater flexibility and convenience. According to Michael Linford, the chief operating officer of Affirm, buy now, pay later options are gaining widespread adoption as consumers seek alternatives to traditional credit cards.
Recent statistics show that an estimated 86.5 million Americans utilized buy now, pay later loans in 2024, with this number expected to rise to 91.5 million in 2025. A survey conducted by LendingTree revealed that nearly half of Americans have used a buy now, pay later service like Affirm or Klarna at least once, with 11% using the service multiple times.
Moshe Orenbuch, a senior analyst at TD Cowen, suggests that buy now, pay later options are displacing parts of the credit card industry. These plans cater to individuals who may be reluctant to use credit cards or have limited available credit. Kevin King, the vice president of credit risk and marketing strategy at LexisNexis Risk Solutions, notes that each purchase financed through buy now, pay later represents a missed opportunity for credit card companies to generate revenue.
Despite the appeal of buy now, pay later plans, big banks and financial institutions are approaching these options with caution. Kevin King highlights that buy now, pay later transactions create a blind spot in the credit profile of consumers, making it challenging for traditional lenders to assess credit quality accurately.
The rising popularity of buy now, pay later loans has prompted concerns among traditional lenders. To gain a deeper understanding of the factors driving the growth of these plans and the apprehension of banks and credit card companies towards consumers utilizing buy now, pay later programs, watch the video above.
As the landscape of consumer finance continues to evolve, buy now, pay later options are reshaping the way consumers approach shopping and payment methods. With their convenience and flexibility, these plans are poised to become a significant player in the financial industry, challenging the dominance of traditional credit cards.
