People with anxiety, depression, post-traumatic stress symptoms more likely to use ‘buy now, pay later’ loans

People managing depression, anxiety and post-traumatic stress are more likely to make use of “buy now, pay later” loans, new international research suggests. Researchers from the Johns Hopkins Bloomberg School of Public Health, in the United States, made the finding after testing the association between symptoms of mental ill-health and use of such short-term schemes. Buy now, pay later loans operate by offering short-term, interest-free debt that can be paid off in instalments. The researchers analysed data from more than 2100 people in a long-term mental health study, 341 of whom had used at least one of these types of loans in the past year. Their results suggested that “probable depression, anxiety and post-traumatic stress were associated with greater odds of BNPL (buy now, pay later) use”. “Our findings were consistent with previous work that suggested that people with poor mental health may experience challenges with financial decision-making,” the study said. Being younger or female were also linked to higher uptake of buy now, pay later schemes. In Australia, the Reserve Bank’s latest consumer payments survey revealed almost one in three Australians had used a BNPL service in the past year, up about 8 percentage points since 2019. Usage was highest among younger Australians, with more than 40 per cent of those aged 18-39 having used a BNPL service in the past year. The Johns Hopkins researchers said their findings suggest symptoms of mental ill-health could be linked to challenges with financial decision-making, but it’s also possible that financial stressors could be contributing to poorer mental health. “Due to its data-driven, hyperpersonalised user interface design, BNPL may generate a feedback loop of unplanned purchases,” the study said. “BNPL availability increases impulsive purchases by 13 per cent. BNPL use also increases levels of unsecured consumer debt, which contributes to poorer health and foregone medical care. “These risks may be amplified for people with poor mental health.” The researchers acknowledged the study was limited by lack of clinical diagnoses for mental health concerns, instead using generalised screening tools to measure “probable” symptoms of anxiety, depression or post-traumatic stress. Despite the limitations, they said the findings underscore “the need for consumer protections to prevent deteriorating financial standing and worsening mental health among adults”. Lifeline 13 11 14 Beyond Blue 1300 224 636