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The
conclusion, from a new study, indicates that credit card lenders
might not have lost as much business as suspected during the
pandemic to the rise of "buy now, pay later" plans.
"These new forms of financing are growing the credit pie,
opening up more opportunities for both consumers and lenders,"
said Liz Pagel, senior vice president of consumer lending at
TransUnion.
The study looked at credit profiles of more than 4.5 million
people who applied for point-of-sale financing from October 2019
through March.
TransUnion found that a smaller portion of people who applied
had reduced their card debt, 54%, compared with 60% of the
general population. Some 20% increased their card debt by more
than half.
Though financial technology companies have lured shoppers
https://www.reuters.com/article/us-usa-consumers-pay-later-idUSKBN2A8036
with the additional ways to borrow, big banks have continued to
predict that card lending revenue will increase as card balances
rebound from being paid down during coronavirus lockdowns.
The study did not determine how much additional card lending
banks lost to "buy now, pay later."
In a separate TransUnion survey in August, one-third of people
who had used a "buy now, pay later" plan said they would have
used a credit card had the plan not been available.
Those applying do not appear to be increasing the risk of losses
on existing loans, TransUnion said. Delinquency rates on their
credit cards six months after their applications were only
slightly worse than the general population at 3.2% versus 2.7%.
"It does not look like, at this point, consumers are over
leveraging themselves," Pagel said.
(Reporting by David Henry in New York; Editing by Mark Potter)
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