While many borrowers that use Buy Now, Pay Later (BNPL) products without noticeable indications of financial stress, BNPL borrowers are more likely to be active users of other types of credit products like credit cards, personal loans and student loans, according to a recent report from the CFPB.

BNPL borrowers are also more likely to exhibit measures of financial distress than non-users. For example, BNPL borrowers are more likely to be highly indebted or have revolving balances or delinquencies on their credit cards compared to consumers who do not use BNPL products. In addition, BNPL borrowers are also more likely to use high-interest financial services such as payday loans, pawn loans, and bank account overdrafts, the report states.

“A common misconception of Buy Now, Pay Later borrowers is that they lack access to other forms of credit. Our analysis shows that these borrowers are more likely to use other credit products,” said Rohit Chopra, CFPB director. “Since Buy Now, Pay Later is like other forms of credit, we are working to ensure that borrowers have similar protections and that companies play by similar rules.”

The data for the report, “Consumer Use of Buy Now, Pay Later,” is from the “2022 Making Ends Meet” survey and the CFPB’s Consumer Credit Panel, which contains an anonymized sample of credit bureau records.