With credit card interest rates at a historic high, consumers are likely to gravitate to lower-cost alternatives, including potentially buy now, pay later options, industry consultants say.
Buy now, pay later financing may have increased appeal for consumers during the year-end holiday shopping season this year in light of credit card interest rates being higher than ever, industry consultants say.
Annual interest rates on credit cards rose to a historic high earlier this year and remain elevated compared to previous years, which has consumers looking for cheaper ways to spread out payments over time.
“Buy now, pay later is certainly very popular, especially among younger consumers, and it’s really appealing to consumers who are less established financially, and the reason it’s appealing is that it doesn’t require a credit check and doesn’t carry interest,” said Sara Rathner, a credit card specialist at the financial research and marketing firm NerdWallet.