Adults Reporting Poor Mental Health More Likely to Have Used "Buy Now, Pay Later” Loans in Past Year
New national study underscores possible link between mental health and "Buy Now, Pay Later" loan use, suggests need for consumer protections
A new study finds that U.S. adults reporting recent symptoms of depression, anxiety, or post-traumatic stress were more likely to have used Buy Now, Pay Later (BNPL) loans in the past year.
The findings were published online December 12 in a peer-reviewed research letter in JAMA Health Forum.
BNPL loans allow shoppers to split purchases into interest-free installments at the point of purchase, often over four to six months and with no credit check. The Consumer Financial Protection Bureau has warned that BNPL’s can encourage “loan stacking”—taking out multiple loans across firms—habitual use, and difficulty keeping up with other financial obligations.
Using a nationally representative sample of 2,121 U.S. adults collected from March to April 2024, researchers examined past-year BNPL use alongside reported depression, anxiety, and post-traumatic stress (PTS) in the past two weeks. Of the sample, 341 individuals reported using BNPL loans. Among those, 108 reported depression, 73 reported anxiety, and 50 reported PTS in the past two weeks. All three mental health indicators were associated with BNPL use, after adjusting for age, gender, race/ethnicity, marital status, education, income, and employment status. People reporting signs of depression were nearly twice as likely (1.91 odds) to use “Buy Now, Pay Later” plans compared to those not reporting symptoms. Those with anxiety had similarly higher odds (1.77), and people with probable post-traumatic stress were more than twice as likely to use BNPL (2.35 odds). When all three indicators were examined simultaneously, PTS remained the strongest independent predictor.
“Our findings suggest that people with poor mental health may be more likely to use alternative financial products. It underscores the need for greater clarity for users on the terms of [buy now, pay later] and the potential repercussions of missed payments, which could worsen financial standing.”
“Financial strain and mental health challenges are deeply intertwined,” says senior author Catherine Ettman, PhD, an assistant professor at the Johns Hopkins Bloomberg School of Public Health Department of Health Policy and Management. “Our findings suggest that people with poor mental health may be more likely to use alternative financial products. It underscores the need for greater clarity for users on the terms of BNPL and the potential repercussions of missed payments, which could worsen financial standing.”
Prior research suggests poor mental health may impair financial decision-making and that BNPL increases susceptibility to impulsive purchases. Data-driven digital platforms, which often personalize offers in real time, may further heighten these vulnerabilities.
The authors note the possibility of a two-way relationship: Mental health challenges may lead to BNPL reliance but financial stress caused by BNPL use may also worsen mental health. The authors also note that BNPL may offer a safer alternative to high-interest credit cards or payday loans for some individuals.
The study had limitations, including the use of cross-sectional data and the use of self-reported measures of poor mental health and BNPL use. In addition, the survey measured poor mental health in the past two weeks versus BNPL use over the past 12 months.
The authors call for strengthened consumer safeguards and further longitudinal research to clarify causal pathways. “As BNPL becomes a more commonly used financial tool, it is important to ensure that these tools do not deepen financial hardship,” Ettman says.
“Poor Mental Health and the Use of Buy Now, Pay Later Loans” was co-authored by Hridika Shah, MSPH, Emma Prus, MPP, Brian Castrucci, DrPH, Sandro Galea, MD, DrPH, and Catherine K. Ettman, PhD.
Study data was collected as part of Wave 5 of the CLIMB (Cumulative Life Stressors Impact on Mental Well-being) Study, a nationally representative, longitudinal study that measures mental health, assets, and policy preferences in U.S. adults.
The CLIMB Study is funded in part by the de Beaumont Foundation and by a Johns Hopkins University Nexus Award.
