Buy now, pay later is booming, and experts say the risks are growing

Core Insights - The Buy Now, Pay Later (BNPL) model is gaining popularity among consumers, particularly during the holiday shopping season, with over $10 billion expected in purchases, marking a 9% increase from the previous year [2] - BNPL is especially appealing to consumers under 40 and those with damaged credit, as it provides more accessible credit options compared to traditional credit products [3][4] - The model involves multiple individual loans for each purchase, which can lead to difficulties in tracking payments and potential overspending, creating a phenomenon referred to as "shadow debt" [5] Consumer Behavior - Half of holiday shoppers plan to use BNPL this year, with 1 in 4 Gen Z and millennial shoppers using it regularly [2] - Consumers often choose BNPL options available at checkout, leading to loans spread across various providers, complicating payment tracking [5] Regulatory Attention - Attorneys general from California and six other states are investigating BNPL providers regarding their products, services, and fees, highlighting concerns about consumer understanding and potential debt accumulation [6][7] Alternatives to BNPL - Alternatives to BNPL include 0% APR credit cards, personal loans, savings accounts, and Payday Alternative Loans (PAL), which may offer more favorable terms and reduce the risk of accumulating debt [8] Consumer Tips - Consumers are advised to understand loan terms, track payment due dates, and monitor account activity to avoid unexpected charges and potential financial pitfalls [9]