What Do Higher Interest Rates Mean for Buy Now Pay Later?

It's been a volatile year across nearly every asset class as investors focus on ongoing inflation and what the Federal Reserve will do to combat it.

In times of inflation, the Fed looks to raise interest rates to suppress demand and stifle increasing prices. These changes in interest rates have a ripple effect across markets, including the buy now, pay later (BNPL) industry. Firms in the industry face headwinds from rising borrowing costs -- here's what you should consider before investing in the industry.

Buy now, pay later options grew rapidly in recent years, driven by low borrowing costs and strong consumer demand for goods. The industry grew at an 85% compound annual growth rate from 2019 to 2021 as millennials and Generation Z customers turned to the low-interest rate installment plans.  

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Source Fool.com