Americans Are Racking Up ‘Phantom Debt’ That Wall Street Can’t Track
Consumers have embraced ‘Buy Now, Pay Later’ products that allow them to pay for purchases in installments, but it’s not clear how many of these loans are out there.
Illustration: Jovana Mugoša
It's hard enough for central bankers and Wall Street traders to make sense of the post-pandemic economy with the data available to them. At Wells Fargo & Co., senior economist Tim Quinlan is particularly spooked by the “phantom debt” that he can't see.
That specter lurks behind buzzy “Buy Now, Pay Later” platforms, which allow consumers to split purchases into smaller installments. The major companies that provide these so called “pay in four” products, such as Affirm Holdings Inc., Klarna Bank AB and Block Inc.’s Afterpay, don’t report those loans to credit agencies.