Klarna reported an uptick in customers facing difficulties in repaying their 'buy now, pay later' loans, aligned with data from Bankrate and LendingTree indicating a rising percentage of users falling behind on payments. This trend reflects broader financial distress within the U.S. population, amid growing consumer debt. Notably, younger consumers and minority groups, such as Black and Hispanic women, are adopting these financing options. Analysts note the potential for overextension among these vulnerable groups, with Klarna experiencing a 17% rise in credit losses in the first quarter of the year compared to last year.
"While BNPL provides credit to financially vulnerable consumers, these same consumers may be overextending themselves," the authors of the Federal Reserve study wrote.
The increase in Klarna’s consumer credit losses reflects the higher number of loans made year over year, rising 17% from the previous year.
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