Buy now, pay later loans will soon hit credit scores — and experts think Gen Z could be at risk
Experts fear this could cause trouble for the biggest users of BNPL: Gen Z.
BNPL loans don't behave like traditional credit: they break a purchase down into four interest-free payments over six weeks, making them harder to factor into credit scores.
But there's an increased emphasis on monitoring the BNPL space, and FICO's move to incorporate BNPL loan data into its scores follows Affirm's move in April to start reporting new loans to Experian and TransUnion.
Concerns about the impact of BNPL have risen alongside its rise in popularity. Research from EMARKETER predicts total US BNPL transactions to reach $108 billion in 2025, up from $94 billion in 2024.
According to a Lendingtree report, 41% of BNPL users reported paying late, up from 34% a year ago. Users are increasingly leaning on BNPL to pay for essentials, with 25% of users buying groceries and 33% seeing BNPL as a "bridge" to their next paycheck.
Gen Z and millennials have been the biggest adopters of this payment plan method. Lendingtree found that Gen Z was more likely to have multiple BNPL loans at the same time.
The lack of impact on credit scores up to this point have been an attractive factor, according to a study by the Federal Reserve Bank of Kansas City.
"BNPL is convenient because you don't need to pay credit interest, but that can also nudge young people to spend more and overextend," Fumiko Hayashi, vice president of economic research at the Kansas City Fed, told Business Insider.
Aditi Routh, economist at the Kansas City Fed, attributes Gen Z's high usage to their tech savviness and openness to adopting new payment technologies.
Gen Z in particular has exhibited weaker credit card spending growth compared to older generations, according to David Tinsley, senior economist at the Bank of America Institute.
This could be a sign that rising living costs are putting pressure on younger consumers, and Gen Z could be relying on BNPL to help them avoid racking up credit card debt and hurting their credit scores.
With credit scores no longer shielded from BNPL activity, Gen Z could be affected more than other cohorts.
"The benefit is that the good repayment behavior may improve your credit score, but BNPL is unsecured credit. Multiple lines of unsecured credit use usually leads to a negative credit score," Hayashi said.
While BNPL can theoretically be used in a low-risk way to manage cash flow, Hayashi and Routh found that BNPL users were significantly more likely to face financial constraints than non-users. BNPL users who paid late exhibited even higher levels of financial constraint.
Given the fact that BNPL users tend to be younger and more financially vulnerable, increased regulation in the payments space could reveal consumer weaknesses and hit credit scores.
Hayashi and Routh said they plan to continue monitor Gen Z spending habits to gather more information on the extent of the risk.
"As a researcher, we don't know much about Gen Z behavior," Routh said. "We know boomers and Gen X behavior relatively well, but there's a lack of knowledge about young people."
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Journals
2 hours ago
- Business Journals
7 strategies to attract top talent in a competitive job market
Finding and keeping exceptional employees is one of the biggest challenges businesses face today. Whether it's due to economic uncertainty, fierce competition for specialized roles, or evolving candidate priorities, the pressure to attract top talent is real. But attracting talent isn't just about filling open roles. It's about building a resilient, engaged workforce that drives innovation and sets your company up for long-term success. By making talent acquisition a strategic pillar of your HR strategy, you can position your business to compete and thrive. Here's how to attract the best and brightest in today's competitive landscape. The Strategic Importance of Top Talent Talented employees are pivotal to your company's success. They boost productivity, enhance innovation, and strengthen your competitive edge. Attracting top talent ensures you bring in individuals who align with your business objectives and contribute to both immediate goals and long-term sustainability. Retaining these key players not only saves on costly turnover but also fosters a positive company culture. That reputation, in turn, makes your organization even more attractive to future candidates. Seven Strategies to Attract Top Talent 1. Promote Your Employer Brand Your mission, vision, and values are the foundation of your employer brand. They define who you are, what you stand for, and the impact you aim to make in your industry and community. Today's job seekers, especially Millennials and Gen Z, gravitate toward companies with a clear purpose and values that align with their own. Employees want roles that feel meaningful—not just professionally but personally. To attract this talent, promote your employer brand consistently across your website, job descriptions, and social media. Ensure your messaging is genuine and speaks to your company's unique strengths and purpose. 2. Highlight and Evolve Your Workplace Culture Workplace culture defines the day-to-day experience of being a part of your team. It's about how employees collaborate, treat one another, and engage with their work. Ask yourself questions like: Is your leadership open, supportive, and transparent? Do teams work collaboratively, or are silos holding them back? Are employees empowered with flexibility and autonomy? If your culture is a strength, showcase it. Talk about it in job postings, in interviews, and on your company platforms. And if there's room for improvement, take active steps to align your culture with the traits that today's workers value, such as open communication, empathy, and work-life balance. 3. Regularly Review and Enhance Benefits Basic benefits like health insurance, retirement plans, and PTO are expected by today's workforce. But to stand out in the hiring market, you must go beyond the basics. Consider offering extras such as expanded retirement matches, increased PTO, or student loan repayment assistance. Stay competitive by benchmarking your benefits package against what industry leaders and competitors provide. Sometimes, even small enhancements can make your company more attractive to discerning candidates. 4. Prioritize Flexibility Flexibility has become a top priority for employees. Whether it's remote work, hybrid schedules, or flexible hours, today's workforce values autonomy in how and where they perform their jobs. Gone are the days when a rigid 9-to-5 schedule worked for everyone. Employees increasingly seek balance, whether that means working from home, choosing their hours, or reducing commute times. A flexible work environment not only appeals to potential hires but also helps retain current team members. 5. Leverage Employee Ambassadors Your current employees are your best advocates. Happy team members naturally become ambassadors who can influence prospective hires positively, whether it's through word of mouth, employee reviews, or social media posts. Encourage employees to share their experiences and professional wins (while adhering to your social media and confidentiality policies). Consider creating an employee referral program with tangible incentives, such as bonuses, for successfully recruiting new talent. Candidates trust employee perspectives, and a strong referral system can amplify your hiring efforts. 6. Manage Your Online Presence Job seekers will research your company long before they apply. Your brand's online reputation matters, whether it's reviews on job sites, press mentions, or social media. Proactively monitor how your company is perceived online. Address negative reviews about your business with professionalism and empathy, showing that you're willing to learn and adapt. Ensure your website and external-facing materials are functional, consistent, and aligned with your values. A strong online presence removes doubts and reassures candidates of your professionalism. 7. Personalize and Streamline Recruiting Processes Today's job seekers don't just want another job; they want to feel valued. Avoid one-size-fits-all recruiting tactics and create tailored strategies for each role. Write job descriptions that focus on the purpose and value of each position rather than overwhelming readers with technical, dry language. Be clear about career development opportunities within your organization, as top talent is eager to understand their growth potential. Also, streamline your hiring process. Swift communication, clear timelines, and respect for candidates' time all contribute to an excellent experience that leaves a positive impression, even if they don't end up accepting the role. Summing It Up Attracting top talent requires a blend of strategy, authenticity, and adaptability. By promoting a strong employer brand, fostering a great workplace culture, offering standout benefits, and maintaining a flexible environment, you can meet the expectations of today's workforce. Add in personalized recruiting efforts and a polished online reputation, and you'll be well-equipped to secure exceptional talent in even the most competitive markets. Want to strengthen your talent acquisition strategy? Download our guide to recruiting and hiring top-tier employees today! At Insperity, it's not just HR outsourcing, it's HR that makes a difference. Our comprehensive, scalable HR solutions offer an optimal blend of service and technology to facilitate growth by streamlining processes related to payroll, benefits, talent management and HR compliance. We provide the tools to help you lighten your administrative load, maximize productivity and manage risks – so you can focus on growth. Because that's what it means to have a true HR partner. .
Yahoo
4 hours ago
- Yahoo
Boomer homeowners aren't as well off as you may think
Over a third of older households were cost-burdened in 2023. As the population of Americans 80 and older mushrooms, their housing woes are intensifying. While renters are struggling the most, homeowners are also facing rising costs. If you're a millennial or Gen Zer with a penchant for scrolling Zillow, you've probably found yourself envying the boomer homeowners whose home values have ballooned to prices you could never afford. But many aging households — both renters and homeowners — are struggling with rising housing costs. As the number of older Americans, particularly those in their 80s and older, grows, their housing woes are intensifying. About a third of 65-and-older households were cost-burdened in 2023, meaning they spent more than 30% of their income on housing, according to a new report from Harvard's Joint Center for Housing Studies. More than half of those were severely cost-burdened, spending more than 50% of their income on housing. Business Insider is covering how older people are dealing with a shortage of housing and rising costs. If you're 65 or older, fill out this form to contribute to our stories and read more here: A boomer quit nursing to live on $2,972 monthly in Social Security in an RV in America's parks: 'I literally live in heaven' Baby boomer homeowners fear losing their properties as they spend down their savings Meet the boomer homeowners who are sitting on their valuable properties because of a tax they hope is on the way out Household incomes tend to decline as people enter their 80s, when many lose their partners and have to support themselves on a single income. That can make what's often their biggest monthly expense — housing costs — even more difficult to manage. With the oldest baby boomers on the cusp of turning 80, this dynamic is expected to put a lot of additional pressure on accessible housing, long-term care, and other services older people rely on. "We're on the precipice of a pretty big shift in demand," said Jennifer Molinsky, the director of Harvard University's Housing and Aging Society Program. "The share of older adults 65-plus is going to tilt older, and I think a higher share will have cost burdens." Older renters are worse off than homeowners. A majority of them — 58% — were cost-burdened in 2023, most of them severely, the Harvard report found. But homeowners are also increasingly struggling. A growing share of older homeowners — 31% of those in their 80s, as of 2022 — are still saddled with mortgages, and 43% of them are cost-burdened. That's more than twice the share of those without mortgages, the report found. But even those who own their homes outright are still dealing with other ballooning housing costs, including insurance premiums, property taxes, utilities, and home repairs. Love Business Insider? Log into Google and make us a preferred source. The number of older households financially strained by their housing has grown from just over 10 million in 2019 to more than 12.4 million in 2023. Meanwhile, home prices have soared over the last several years, mortgage interest rates are stubbornly high, and smaller, more affordable homes that could be suitable for aging empty-nesters looking to downsize are a shrinking slice of the pie. Just 9% of new homes built in 2023 were under 1,400 square feet. This dynamic is undermining a long American tradition: treating homes as retirement nest eggs. Many homeowners bank on selling their home, downsizing, and living off their sale profits in their older age. But the housing shortage also means that even many homeowners sitting on valuable home equity who want to cash in are having trouble finding somewhere to go. "There just aren't that many smaller condos or apartments that are less expensive that you're going to be able to make that trade off and stay in your community," Molinsky said. Read the original article on Business Insider
USA Today
6 hours ago
- USA Today
What is task masking? Why Gen Z is rebranding quiet quitting
When return-to-office mandates started to rise post-pandemic, many workers who had become accustomed to getting tasks done remotely at home (and at their own pace) were presented with a new problem. In an office, you also need to appear as though you're always busy, which is known as performative productivity. According to Madeline Mann, an expert career coach, that's led to a new work trend for burnt-out Gen Z office workers: 'task masking.' 'Task masking is essentially looking like you are busy doing important work, when it's more to keep up appearances,' Mann explains, noting that this might look like scheduling emails to go out at all times of the day, repeatedly announcing how overburdened you are, filling your calendar with real and made-up meetings and generally prioritizing busy work. According to a recent poll from tech company Workhuman, more than one-third of UK workers admits to engaging in 'fake productivity.' Mann adds that 'task masking' is tightly tied to another workplace trend that gained steam in 2022: quiet quitting. 'You can draw a connection between task masking and quiet quitting because both focus on underachieving and putting in less effort at work.' Unlike quiet quitting (where an employee might start visibly putting in less effort on important tasks), Mann notes that task masking could actually help get you promoted — but could lead to some dangerous situations down the road. Here's everything to know about task masking and how to shift your career approach without burning out. Why task masking is so popular with Gen Z As Mann observes, Gen Z is a decidedly different generation from millennials, Gen X or Boomers in terms of their workplace attitudes. 'When I speak with educators and managers who have seen decades of young people come through, they do note a difference in Gen Z's ability to develop soft skills, and Gen Z's anxiety around human interaction,' Mann says. 'This can be attributed to Gen Z being the first digitally native generation who skipped many of the social interactions that the rest of us have had.' According to 2023 research from the science journal Heliyon, having soft skills — like empathy, communication abilities and flexibility — is critical for getting ahead at work. Still, as Mann says, members of Gen Z are no dummies. 'Gen Z is learning how the corporate game is played, while also watching the corporate game evolve quickly with the increase in remote work, AI and new technology in the workplace,' she says. She points out that this allows them to quickly spot ways to do less work without getting penalized. How task masking can be dangerous As Mann explains, yes — task masking might make you look pretty good in the short run. As for a long-term career strategy? It's problematic. 'Task masking can hurt younger employees because they won't have measurable value and accomplishments to show for their work, which will hurt their opportunity for raises, promotions, good references and strong resume bullets,' she says. 'At a time when each role is being scrutinized for layoffs and replacement with AI, it's important to show clear contributions that lead to results.' How to shift your career approach without burning out Per 2024 research from the journal Asian Management and Business Review, millennial and Gen Z workers who are dissatisfied with their jobs tend to show less motivation and decreased engagement, and they might engage in acts like task masking or quiet quitting. At this point, Mann advises it's important to be honest with yourself. 'If you find yourself avoiding work, having trouble focusing or are mentally exhausted by the end of the day, those are clear signs you are on the wrong career path,' she explains. 'I was a miserable task-masking junior employee working in market research, and then a high-performing junior employee working in human resources because I shifted to a career that played to my strengths.' As Mann explains, you should still try to stay visible where it counts. 'It's not about always being available to the business, but staying visible is important, so focus on doing high-impact tasks,' she notes. 'That includes saying something each day in the company instant messenger that is visible to many people, updating your manager weekly and checking in with key stakeholders across the business monthly. These three actions alone can do wonders.' Depending on your role, Mann recommends presenting your own metrics of tracking to your boss. This will help retain a sense of control (something task masking might've offered you prior), while still being realistic about what you can and can't achieve. 'Try setting up daily or weekly check-ins with your boss outlining what you've accomplished, what your priorities are and where you're stuck,' Mann suggests. The result? 'Your boss will then notice your achievements, help unblock issues, and advise on whether your priorities are correct,' Mann explains. 'If your boss asks you to do something that you don't have time for, ask them which of your other projects should be deprioritized to focus on this new one.' The bottom line, Mann says, is that when you continue accepting work beyond your capacity just to show you're a team player, it might send the message that you weren't all that busy to begin with. 'So this visibility into your workload helps to ensure your boss sees how much you have to work on and is more likely to appreciate it,' she adds. What is USA TODAY Top Workplaces 2025? Do you work for a great company? Each year, USA TODAY Top Workplaces, a collaboration between Energage and USA TODAY, ranks organizations across the United States that excel at creating a positive work environment for their employees. Employee feedback determines the winners. In 2025, over 1,500 companies earned recognition as top workplaces. Check out our overall U.S. rankings. You can also gain insights into more workplace trends and advice by checking out the links below.
