Federal Reserve, 'The Only Way I Could Afford It': Who Uses BNPL and Why (FEDS Notes, Dec. 20, 2024)

The Federal Reserve named this paper after what borrowers told them.

Verbatim: “In 2023, about one-fourth of Black and Hispanic women used BNPL, more than double the rates of use among White women (11 percent) and Asian women (8 percent).”

And, verbatim: “Controlling for other factors like age, income, and credit score can explain about half of these higher use rates among Black women, yet only about one-fourth among Hispanic women.”

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⚠️ CORRECTION ON THE RECORD. A research pass rendered this finding as: “~25% of Black and Hispanic women used BNPL vs 11% of white women, even controlling for income and education.” Wrong twice.

1. The controls are age, income, and credit score. Education is not among them.
2. Those controls explain about half the gap for Black women. They do not leave it intact. “Even controlling for” overstates what the study says.

The headline figures hold. The framing did not. State it as the Fed states it: the controls explain about half, and the other half they cannot explain.

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🔴 THE FINDING THAT REFUTES THE OBVIOUS ESSAY. Read this before writing a word about BNPL.

The paper’s title is “The Only Way I Could Afford It.” It is a survey answer option (Table 6), not a spontaneous quotation, and the paper’s own conclusion is the opposite of what the title invites:

“similar shares of White, Black and Hispanic women cited ‘the only way I could afford it’ as a reason for using BNPL, suggesting that necessity is not the reason Black and Hispanic women use BNPL more frequently than White women.”

Necessity is NOT the reason. What the Fed found instead:

“We find evidence that Black and Hispanic women are more likely to prefer BNPL for its convenience and specific product features like a fixed number of payments.”

They prefer it. They chose the product that states how much, how many, and when it ends.

Any essay that frames Black women’s BNPL use as desperation contradicts the source it is citing, and does so in the condescending direction. WR came within one review of publishing exactly that.