"world says" foreign media: us holiday season "buy now, pay later" consumption will hit a record, which may put consumers into a debt cycle
2024-09-26
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china daily reported on september 26 that due to factors such as inflation and interest rates, american families are finding it difficult to maintain a balance between income and expenditure. people are more dependent on the "buy now, pay later" (bnpl) service method, and credit card debt has surged across the united states. many industry insiders pointed out that getting used to this method may cause consumers in the country to fall into a debt cycle that is difficult to escape.
according to a report by reuters, adobe analytics, a data analytics company, released a forecast on the 25th showing that u.s. consumers are expected to spend a record $18.5 billion on holiday shopping through third-party "buy now, pay later" service platforms in the fourth quarter of this year. the company said that because many americans have recently taken on more debt, spending on "buy now, pay later" services during this year's holiday season will increase by 11.4% compared to last year's holiday season.
screenshot of reuters reportspending using buy now, pay later is expected to grow significantly for the period nov. 1 to dec. 31, outpacing the 8.4% growth expected for overall spending during the upcoming holiday shopping period, to about $240.8 billion, according to data firm adobe analytics’ forecast for the period nov. 1 to dec. 31.
delicia hand, senior director of digital markets at consumer reports, a u.s. nonprofit consumer organization, said consumers who use credit cards to pay for installment purchases may be trapping themselves in a cycle of debt that is difficult to escape.
the new york fed’s monthly consumer expectations survey, which includes asking consumers to estimate the likelihood of a loan default within the next three months, came in at 13.6% in august, the highest level since a brief spike during the coronavirus pandemic.
affirm, a us fintech company that provides one of the installment payment platforms, predicts that consumers will buy electronic products including mobile phones, laptops and headphones during the upcoming us holiday season. in addition, beauty products will also become a popular category for consumers who buy gifts in a "buy now, pay later" manner.
research by jd power, a world-renowned market research organization, also shows that only 46% of american cardholders are "financially sound," and 51% of the respondents have revolving debts on their credit cards. the average interest rate they report on new purchases has reached 15.6%.
the u.s. consumer news and business channel (cnbc) reported on the 25th that the average american has thousands of dollars in credit card debt. the new york federal reserve's report in august showed that as of the second quarter of this year, americans' overall credit card debt reached a record high of $1.14 trillion.
from the first quarter of 2018 to the second quarter of 2024, the total amount of credit card debt in the united states hit a record high. (cnbc screenshot)but ted rossman, senior industry analyst at bankrate, noted: "americans don't necessarily go into debt to buy luxury goods. people often get into credit card debt for more pragmatic reasons, such as emergency expenses and daily spending, and this cycle is difficult to break."
in addition, the bank found that many americans have long-term outstanding balances on their credit cards, with about a third of them carrying balances for one to three years. "credit card debt is easy to incur, but hard to get rid of," rossman said.
(translated by ma rui, edited by gao linlin and han he)
source: china daily
