Latest news with #HaiyanHuang
Yahoo
4 hours ago
- Business
- Yahoo
Why 'Buy Now Pay Later' could be wrecking your financial future
Buy now pay later users are increasingly paying much later. Klarna, one of many companies that allow users to purchase something now and pay in installments over time, said last month consumer credit losses in the first three months of the year rose 17% from a year ago. Klarna attributed the increase to "significant Klarna issued many more loans during the quarter, the total dollar value of losses naturally rose as a result of increased volume." Still, Klarna's global percentage of unpaid loans inched up to 0.54% from 0.51%, and earlier surveys mirror that uptick. A survey by LendingTree showed 41% of users paid late at least once in the past year, up from 34% a year ago. Bankrate's survey showed 18% missed a payment. With the economy slowing and big pandemic savings long gone, financial advisers are warning users, who tend to lean younger, BNPL could be wrecking their financial future. 'If using BNPL, it's likely you don't have savings to cover the costs of making purchases,' said Rick Miller of Miller Investment Management. 'Saving for retirement is likely not even a thought in your mind. You need to pay yourself first and shouldn't be spending what you can't afford.' Know the apps: From Klarna to Sezzle: Ranking of apps looks at whether buy now, pay later is a good idea Buy now pay later expands: Costco, Affirm partner to launch buy now, pay later option for online orders Americans often use BNPL to purchase a good or service they can't currently afford. They make an initial payment and spread out the rest of the cost over time and pay in installments. In essence, they're taking a loan for the balance. A quarter of BNPL users say they've used the loans to buy groceries, said LendingTree's survey of 2,000 U.S. consumers ages 18 to 79 from April 2 to 3. That's up from 14% just a year ago, amid rising prices at the supermarket, it said. A third of users see BNPL as a 'bridge' to their next paycheck, LendingTree said. That's up from 30% last year and 27% the year before. Clothing, including shoes and accessories, is the item most commonly bought using BNPL, followed by technology devices and home décor, LendingTree said. The average purchase amount was $142 in 2022, the most recent year of data, according to the Consumer Financial Protection Bureau (CFPB). However, it noted approximately 63% of users had multiple BNPL loans. Overspending: 'Relying on BNPL and short debt gives consumers a false sense of affordability, making it easier to overextend financially,' said Haiyan Huang, chief credit officer at Prosper. Limiting future borrowing: 'If BNPL is helping you make purchases you cannot afford to pay back, then your credit score could take a hit,' especially if you miss payments, Miller said. 'This can hinder your ability to borrow in the future, which could be crucial as you get older and seek a mortgage (or) car loan.' BNPL payment history usually isn't reported to the major credit reporting companies, but a failure to repay may be reported by a debt collector, CFPB said. BNPL companies also can restrict your use in the future. Credit scores help determine 'interest rates for loans and mortgages, your insurance premiums, rental approvals, credit limits on credit cards, and can potentially impact employment,' Huang said. Messing with spending and budgeting mentality: 'You may feel like you can make any purchase you want; however, it's likely not the case,' Miller said. 'Future spending, like in retirement, can't be done erratically, as you'll be on fixed income." Also, 'budgeting is something you need to do for your future self, especially when retirement comes around.' Shifting the weight: Weight loss drugs, DoorDash are entering BNPL space. Is 'bite now, pay later' a good idea? The first thing everyone, not just BNPL users, should ask themselves when considering taking on debt is whether the purchase is essential, Huang said. If yes, then consider the repayment schedule and how it might affect repayments on other debt. It's also important to explore all your options before borrowing money, Huang said. Check to see if financial assistance is available. Consider tapping into your equity if you own a home or taking out a personal loan to cover the expenses with a lower interest rate, she said. 'Fixed-rate personal loans can be a strong tool for consolidating high-interest debt or covering major one-time expenses without the confusion or financial juggling BNPL often creates,' Huang said. 'They provide predictable monthly payments, clear repayment terms, and often lower interest rates than credit cards.' Note, most personal loans are reported to credit bureaus, but that's not necessarily bad. 'When used responsibly, (they) can help build or strengthen credit history,' she said. (This story was updated with Klarna's comments about its payments statistics.) Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@ and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday. This article originally appeared on USA TODAY: 'Buy Now Pay Later' could be wrecking your financial future
Yahoo
a day ago
- Business
- Yahoo
Why 'Buy Now Pay Later' could be wrecking your financial future
Buy now pay later users are increasingly paying much later. Klarna, one of many companies that allow users to purchase something now and pay in installments over time, said last month consumer credit losses in the first three months of the year rose 17% from a year ago as users struggled to make payments. That confirmed earlier surveys showing a similar uptick. A survey by LendingTree showed 41% of users paid late at least once in the past year, up from 34% a year ago. Bankrate's survey showed 18% missed a payment. With the economy slowing and big pandemic savings long gone, financial advisers are warning users, who tend to lean younger, BNPL could be wrecking their financial future. 'If using BNPL, it's likely you don't have savings to cover the costs of making purchases,' said Rick Miller of Miller Investment Management. 'Saving for retirement is likely not even a thought in your mind. You need to pay yourself first and shouldn't be spending what you can't afford.' Know the apps: From Klarna to Sezzle: Ranking of apps looks at whether buy now, pay later is a good idea Buy now pay later expands: Costco, Affirm partner to launch buy now, pay later option for online orders Americans often use BNPL to purchase a good or service they can't currently afford. They make an initial payment and spread out the rest of the cost over time and pay in installments. In essence, they're taking a loan for the balance. A quarter of BNPL users say they've used the loans to buy groceries, said LendingTree's survey of 2,000 U.S. consumers ages 18 to 79 from April 2 to 3. That's up from 14% just a year ago, amid rising prices at the supermarket, it said. A third of users see BNPL as a 'bridge' to their next paycheck, LendingTree said. That's up from 30% last year and 27% the year before. Clothing, including shoes and accessories, is the item most commonly bought using BNPL, followed by technology devices and home décor, LendingTree said. The average purchase amount was $142 in 2022, the most recent year of data, according to the Consumer Financial Protection Bureau (CFPB). However, it noted approximately 63% of users had multiple BNPL loans. Overspending: 'Relying on BNPL and short debt gives consumers a false sense of affordability, making it easier to overextend financially,' said Haiyan Huang, chief credit officer at Prosper. Limiting future borrowing: 'If BNPL is helping you make purchases you cannot afford to pay back, then your credit score could take a hit,' especially if you miss payments, Miller said. 'This can hinder your ability to borrow in the future, which could be crucial as you get older and seek a mortgage (or) car loan.' BNPL payment history usually isn't reported to the major credit reporting companies, but a failure to repay may be reported by a debt collector, CFPB said. BNPL companies also can restrict your use in the future. Credit scores help determine 'interest rates for loans and mortgages, your insurance premiums, rental approvals, credit limits on credit cards, and can potentially impact employment,' Huang said. Messing with spending and budgeting mentality: 'You may feel like you can make any purchase you want; however, it's likely not the case,' Miller said. 'Future spending, like in retirement, can't be done erratically, as you'll be on fixed income." Also, 'budgeting is something you need to do for your future self, especially when retirement comes around.' Shifting the weight: Weight loss drugs, DoorDash are entering BNPL space. Is 'bite now, pay later' a good idea? The first thing everyone, not just BNPL users, should ask themselves when considering taking on debt is whether the purchase is essential, Huang said. If yes, then consider the repayment schedule and how it might affect repayments on other debt. It's also important to explore all your options before borrowing money, Huang said. Check to see if financial assistance is available. Consider tapping into your equity if you own a home or taking out a personal loan to cover the expenses with a lower interest rate, she said. 'Fixed-rate personal loans can be a strong tool for consolidating high-interest debt or covering major one-time expenses without the confusion or financial juggling BNPL often creates,' Huang said. 'They provide predictable monthly payments, clear repayment terms, and often lower interest rates than credit cards.' Note, most personal loans are reported to credit bureaus, but that's not necessarily bad. 'When used responsibly, (they) can help build or strengthen credit history,' she said. Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@ and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday. This article originally appeared on USA TODAY: 'Buy Now Pay Later' could be wrecking your financial future Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
USA Today
a day ago
- Business
- USA Today
Why 'Buy Now Pay Later' could be wrecking your financial future
Buy now pay later users are increasingly paying much later. Klarna, one of many companies that allow users to purchase something now and pay in installments over time, said last month consumer credit losses in the first three months of the year rose 17% from a year ago as users struggled to make payments. That confirmed earlier surveys showing a similar uptick. A survey by LendingTree showed 41% of users paid late at least once in the past year, up from 34% a year ago. Bankrate's survey showed 18% missed a payment. With the economy slowing and big pandemic savings long gone, financial advisers are warning users, who tend to lean younger, BNPL could be wrecking their financial future. 'If using BNPL, it's likely you don't have savings to cover the costs of making purchases,' said Rick Miller of Miller Investment Management. 'Saving for retirement is likely not even a thought in your mind. You need to pay yourself first and shouldn't be spending what you can't afford.' Need a break? Play the USA TODAY Daily Crossword Puzzle. Buy now pay later expands: Costco, Affirm partner to launch buy now, pay later option for online orders Why do people use BNPL? Americans often use BNPL to purchase a good or service they can't currently afford. They make an initial payment and spread out the rest of the cost over time and pay in installments. In essence, they're taking a loan for the balance. A quarter of BNPL users say they've used the loans to buy groceries, said LendingTree's survey of 2,000 U.S. consumers ages 18 to 79 from April 2 to 3. That's up from 14% just a year ago, amid rising prices at the supermarket, it said. A third of users see BNPL as a 'bridge' to their next paycheck, LendingTree said. That's up from 30% last year and 27% the year before. Clothing, including shoes and accessories, is the item most commonly bought using BNPL, followed by technology devices and home décor, LendingTree said. The average purchase amount was $142 in 2022, the most recent year of data, according to the Consumer Financial Protection Bureau (CFPB). However, it noted approximately 63% of users had multiple BNPL loans. How can BNPL jeopardize your future Overspending: 'Relying on BNPL and short debt gives consumers a false sense of affordability, making it easier to overextend financially,' said Haiyan Huang, chief credit officer at Prosper. 'Relying on BNPL and short debt gives consumers a false sense of affordability, making it easier to overextend financially,' said Haiyan Huang, chief credit officer at Prosper. Limiting future borrowing: 'If BNPL is helping you make purchases you cannot afford to pay back, then your credit score could take a hit,' especially if you miss payments, Miller said. 'This can hinder your ability to borrow in the future, which could be crucial as you get older and seek a mortgage (or) car loan.' BNPL payment history usually isn't reported to the major credit reporting companies, but a failure to repay may be reported by a debt collector, CFPB said. BNPL companies also can restrict your use in the future. Credit scores help determine 'interest rates for loans and mortgages, your insurance premiums, rental approvals, credit limits on credit cards, and can potentially impact employment,' Huang said. Messing with spending and budgeting mentality: 'You may feel like you can make any purchase you want; however, it's likely not the case,' Miller said. 'Future spending, like in retirement, can't be done erratically, as you'll be on fixed income." Also, 'budgeting is something you need to do for your future self, especially when retirement comes around.' What can BNPL users do? The first thing everyone, not just BNPL users, should ask themselves when considering taking on debt is whether the purchase is essential, Huang said. If yes, then consider the repayment schedule and how it might affect repayments on other debt. It's also important to explore all your options before borrowing money, Huang said. Check to see if financial assistance is available. Consider tapping into your equity if you own a home or taking out a personal loan to cover the expenses with a lower interest rate, she said. 'Fixed-rate personal loans can be a strong tool for consolidating high-interest debt or covering major one-time expenses without the confusion or financial juggling BNPL often creates,' Huang said. 'They provide predictable monthly payments, clear repayment terms, and often lower interest rates than credit cards.' Note, most personal loans are reported to credit bureaus, but that's not necessarily bad. 'When used responsibly, (they) can help build or strengthen credit history,' she said. Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@ and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
Yahoo
10-05-2025
- Business
- Yahoo
Money Stress Is Causing You To Make These 3 Mistakes: How To Avoid Them
A recent survey from Prosper revealed that 45% of Americans believed the economy had worsened since the pandemic, and that only 42% of respondents felt confident managing a significant financial setback. While 48% of respondents think that the economy will improve over the next five years, the reality is that financial stress is causing consumers to make crucial mistakes right now. Read More: Find Out: The survey pointed out that economic pressures were causing major stress issues for Americans in 2024, as people admitted to facing challenges with rising costs, and that debt had become a bigger problem over the years. Financial stress is causing people to make these three major mistakes, and here's how to avoid them. The report showed that 68% of respondents admitted to not having any investments, with 79% of women and 58% of men falling under this category. Not investing is a major financial mistake because you're missing out on possible returns, and you may not be able to retire when you reach the age to do so. It may be challenging to think about investing when you're worried about the state of the economy or barely getting by. Here's how you can avoid this financial mistake. Discover Next: 'Not investing means missing out on one of the most effective tools for long-term wealth building,' said Haiyan Huang, the chief credit officer at Prosper. 'Education and access to beginner-friendly platforms are key to turning hesitation and stress into confidence.' It can be common for people to avoid investing because they don't feel like they have enough money to start or because they're nervous about the process. Investing doesn't have to be intimidating anymore because there are robo-advisors and platforms that let you get started with a small amount of money. These platforms will also offer educational resources like videos and tutorials, so you don't have to be confused about the process. You don't have to study stock charts or follow the news because you can have a robo-advisor manage your funds. James Francis, a financial expert and CEO of Paradigm Asset Management, noted that your brain craves simplicity when stress peaks. He added, 'In this case, automating your savings, even $10 a week, can help build resilience without needing mental bandwidth. Tools like round-up apps or bank auto-saves can also make these investments frictionless.' You can shift your mindset from struggling to get by to being focused on the future by automating your savings and investments so that you know that you're planning for the future. Contributing to a retirement account will help you build confidence about your future and your finances. The best part of automating your investments is that you don't have to do anything else on your end after the initial setup. The survey found that 57% of Americans were living paycheck-to-paycheck by the end of 2024, up from 48% in 2016. Financial stress is causing people to fall behind on their bills and barely have enough money to get by until the next pay period. With prices rising, it's clear that many consumers are stretching their budgets to the limit. Here are a few ways you can avoid this mistake moving forward. 'Living paycheck to paycheck isn't always due to poor spending habits, and it's not a reflection of your character or worth, but it can be a sign that your budget could use a review,' said Huang. You may want to adjust your budget to reflect the current climate so you're not running numbers based on outdated figures. Here's what you can do: Track your spending for the next month to identify problem areas. Review all of your subscriptions to see if there's something you can cut. Update your budget or spending plan to ensure that it's accurate. You may not be earning enough money at the moment, which is causing you to live paycheck to paycheck as you struggle to get by. In this situation, you'll want to explore ways to increase your income to get a better hold of your finances. Some of the best ways to do this are: Look into the gig economy. To earn money, you can list your spare room on Airbnb or walk dogs through Rover. Try starting a freelance side hustle. This could be your opportunity to use your skills, such as writing or graphic design, by getting into freelance work. Sell some of your stuff. You could make some extra money to build up your savings by selling off stuff you no longer use around the house. The report revealed that 63% of Americans disclosed that they couldn't pay off their credit card balances in full, up from 45% in 2016. This situation outlines that Americans are turning to credit cards to get by, which is a significant mistake because these come with high interest rates, and it could become challenging to get out of debt. Here are your best options to avoid this mistake. Francis suggests creating a buffer fund with an accessible stash that can save you from spiralling into debt when life throws unexpected curveballs at you. This emergency fund could reduce your reliance on credit cards. The goal is to do your best to start building this account immediately. You already know that you should pay your credit card balance in full monthly, but you may be overwhelmed with expenses. In this situation, you may want to look into a debt consolidation loan to help you tackle your credit card balances so that it doesn't feel like an impossible struggle. Knowing that resources and tools are available so you don't have to feel alone, is important. Huang concluded, 'Taking small steps, like slowly paying off debt or reviewing your spending, can begin to shift the anxiety into action. Building financial confidence isn't about having all the answers. It's about knowing where to start, who to turn to, and being kind to yourself.' More From GOBankingRates 6 Used Luxury SUVs That Are a Good Investment for Retirees How Far $750K Plus Social Security Goes in Retirement in Every US Region 7 Overpriced Grocery Items Frugal People Should Quit Buying in 2025 12 SUVs With the Most Reliable Engines Prosper, 'Financial Wellness Survey 2024' James Francis, Paradigm Asset Management, This article originally appeared on Money Stress Is Causing You To Make These 3 Mistakes: How To Avoid Them
Yahoo
10-05-2025
- Business
- Yahoo
Money Stress Is Causing You To Make These 3 Mistakes: How To Avoid Them
A recent survey from Prosper revealed that 45% of Americans believed the economy had worsened since the pandemic, and that only 42% of respondents felt confident managing a significant financial setback. While 48% of respondents think that the economy will improve over the next five years, the reality is that financial stress is causing consumers to make crucial mistakes right now. Read More: Find Out: The survey pointed out that economic pressures were causing major stress issues for Americans in 2024, as people admitted to facing challenges with rising costs, and that debt had become a bigger problem over the years. Financial stress is causing people to make these three major mistakes, and here's how to avoid them. The report showed that 68% of respondents admitted to not having any investments, with 79% of women and 58% of men falling under this category. Not investing is a major financial mistake because you're missing out on possible returns, and you may not be able to retire when you reach the age to do so. It may be challenging to think about investing when you're worried about the state of the economy or barely getting by. Here's how you can avoid this financial mistake. Discover Next: 'Not investing means missing out on one of the most effective tools for long-term wealth building,' said Haiyan Huang, the chief credit officer at Prosper. 'Education and access to beginner-friendly platforms are key to turning hesitation and stress into confidence.' It can be common for people to avoid investing because they don't feel like they have enough money to start or because they're nervous about the process. Investing doesn't have to be intimidating anymore because there are robo-advisors and platforms that let you get started with a small amount of money. These platforms will also offer educational resources like videos and tutorials, so you don't have to be confused about the process. You don't have to study stock charts or follow the news because you can have a robo-advisor manage your funds. James Francis, a financial expert and CEO of Paradigm Asset Management, noted that your brain craves simplicity when stress peaks. He added, 'In this case, automating your savings, even $10 a week, can help build resilience without needing mental bandwidth. Tools like round-up apps or bank auto-saves can also make these investments frictionless.' You can shift your mindset from struggling to get by to being focused on the future by automating your savings and investments so that you know that you're planning for the future. Contributing to a retirement account will help you build confidence about your future and your finances. The best part of automating your investments is that you don't have to do anything else on your end after the initial setup. The survey found that 57% of Americans were living paycheck-to-paycheck by the end of 2024, up from 48% in 2016. Financial stress is causing people to fall behind on their bills and barely have enough money to get by until the next pay period. With prices rising, it's clear that many consumers are stretching their budgets to the limit. Here are a few ways you can avoid this mistake moving forward. 'Living paycheck to paycheck isn't always due to poor spending habits, and it's not a reflection of your character or worth, but it can be a sign that your budget could use a review,' said Huang. You may want to adjust your budget to reflect the current climate so you're not running numbers based on outdated figures. Here's what you can do: Track your spending for the next month to identify problem areas. Review all of your subscriptions to see if there's something you can cut. Update your budget or spending plan to ensure that it's accurate. You may not be earning enough money at the moment, which is causing you to live paycheck to paycheck as you struggle to get by. In this situation, you'll want to explore ways to increase your income to get a better hold of your finances. Some of the best ways to do this are: Look into the gig economy. To earn money, you can list your spare room on Airbnb or walk dogs through Rover. Try starting a freelance side hustle. This could be your opportunity to use your skills, such as writing or graphic design, by getting into freelance work. Sell some of your stuff. You could make some extra money to build up your savings by selling off stuff you no longer use around the house. The report revealed that 63% of Americans disclosed that they couldn't pay off their credit card balances in full, up from 45% in 2016. This situation outlines that Americans are turning to credit cards to get by, which is a significant mistake because these come with high interest rates, and it could become challenging to get out of debt. Here are your best options to avoid this mistake. Francis suggests creating a buffer fund with an accessible stash that can save you from spiralling into debt when life throws unexpected curveballs at you. This emergency fund could reduce your reliance on credit cards. The goal is to do your best to start building this account immediately. You already know that you should pay your credit card balance in full monthly, but you may be overwhelmed with expenses. In this situation, you may want to look into a debt consolidation loan to help you tackle your credit card balances so that it doesn't feel like an impossible struggle. Knowing that resources and tools are available so you don't have to feel alone, is important. Huang concluded, 'Taking small steps, like slowly paying off debt or reviewing your spending, can begin to shift the anxiety into action. Building financial confidence isn't about having all the answers. It's about knowing where to start, who to turn to, and being kind to yourself.' More From GOBankingRates 6 Used Luxury SUVs That Are a Good Investment for Retirees How Far $750K Plus Social Security Goes in Retirement in Every US Region 7 Overpriced Grocery Items Frugal People Should Quit Buying in 2025 12 SUVs With the Most Reliable Engines Prosper, 'Financial Wellness Survey 2024' James Francis, Paradigm Asset Management, This article originally appeared on Money Stress Is Causing You To Make These 3 Mistakes: How To Avoid Them
