Here’s why banks, credit card companies are wary of buy now, pay later loans

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Buy now, pay later plans offer an attractive alternative to credit cards for consumers: They allow purchases to be split into short-term, typically interest-free installments.

"Credit isn't new. Credit's been around for thousands of years and credit cards aren't new. But they've had a hard time adapting to consumer needs," said Michael Linford, chief operating officer of Affirm. "I think the thing that we're seeing in the industry right now is widespread adoption of alternatives to credit cards."

An estimated 86.5 million Americans used buy now, pay later loans in 2024, according to eMarketer , and that number could rise to 91.5 million in 2025. A recent LendingTree survey found tha