. Following stay-at-home orders in March, Affirm told CNBC it saw the home fitness category grow 163%, home office grew 200%, and kitchen supplies up 70%.The ease of signing up and popularity may distract from the fine print of these financial agreements. Only 22% of respondents from the Ascent survey said they "fully understand" the terms and conditions of using installment payments.
"You can still get into trouble if you don't make the payments — the biggest downside is that it's people are using it without totally understanding what it means," Dann Albright, financial research analyst at The Ascent, told CNBC. "There are still late fees, interests on late fees, and interest payments for most of the plans but it's not always clear what those are.
Another potential downside is that most of these programs don't help you build credit, because they don't typically report to credit bureaus, Creditcard.com's Rossman told CNBC. Affirm reports to Experian, for example, but popular start-ups Afterpay and Klarna, don't. Some resort to collections agencies if needed, and can bar you from future payment plans if you fall behind.
Doug Bland, PayPal senior vice president of global credit, said the PayPal "Pay in Four" product was aimed at helping businesses drive sales without increasing costs, and giving consumers more flexibility. Like anything, Bland said there may be outliers of the "extreme" when it comes to overspending. But he predicted consumers will use installments in a healthy way.
"That's certainly not something that that we want to see happen and we're incredibly sensitive to ensuring that people understand the use of the product," Bland told CNBC. "For the most part, people are going to use this in a responsible way."
They don't have a choice now. No one has money to spend and these companies are quite aware of it. Why not defer the money and post up the incredible 'sales' so the stock goes up and they can sell before the real crash comes?
The borrower is a slave to the lender-Proverbs 22:7
As if the average American wasn’t already stuck in a debt trap. I know so many people who’s monthly income goes to paying off their credit card debt and fees