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The 'buy now, pay later' bubble is about to burst

theatlantic.com

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Re: The 'buy now, pay later' bubble is about to burst

#161

Post by sebzim4500 »

_fat_santa wrote: post #93
ceejayoz wrote: post #76

Earlier quoted context omitted.

> It doesn't provide any actual reasons for why BNPL is a bubble nor why such a supposed bubble is about to burst. I'll provide one: it only made any significant sense in the near-zero interest rate levels we had last year. "Split it into four payments for $0 fee" is attractive. Much less so when there's a fee; Amazon's BNPL via Affirm is now up to 10-30% APR from the previous 0%. At those rates, people just put it o…

I see BNPL companies as having two types of customers: those that can't afford the full price and want to pay over time, those that read the terms closely and realized the deal is too good not to take. I took out a number of BNPL loans last year and it was never because I couldn't pay the full price but rather if I was getting the money at 0%, "free money". But I was never the target customer of these places, I was j…

Did that actually work? I just assumed they would find a way to charge me 'interest' by having processing fees or some other scam, so I never used them.

Re: The 'buy now, pay later' bubble is about to burst

#162

Post by e63f67dd-065b »

epolanski wrote: post #95
yladiz wrote: post #11

Earlier quoted context omitted.

Okay, I repeat my question above: if you can afford to pay over 12 months (meaning, you don't go into debt to do so), what's inherently wrong with doing it instead of waiting 12 months and paying all at once, besides ideological reasons?

Paying in installments requires you to have a secure stable income. You may not have one tomorrow. You may lose your job. You may go through a divorce. Maybe you have to move for months because your house has been flooded. You don't know what your tomorrow's financials look like. The only time that it may makes sense to pay installments if if the interests are really 0% and you have lots saved anyway. At that point..…

> The only time that it may makes sense to pay installments if if the interests are really 0% and you have lots saved anyway. At that point..why not improve one's credit score anyway.

BNPL providers typically provide 0% interest rates for longer that credit cards, which have 0% interest for anywhere from 3wks to 7wks (depending on when your statement closes relative to when the transaction settles).

Re: The 'buy now, pay later' bubble is about to burst

#163

Post by sebzim4500 »

dusted wrote: post #3

I don't get it.. There's a childrens song in Denmark, it's lyrics go, roughly translated "and if you have money, then you can have, but have you none, then you may go!" (it's about buying bread at the bakery).. When I see how people spend money they don't have, I'm always wondering if their parents never sang for them when they were young, or if they are of a particular dim nature. Sure, I can see why some people wou…

> "But I need a car!" Yes, but you don't need a car you can't save up for, you need a car you CAN save up for.

How are you going to save up for a car if you can't drive to work? You certainly can't afford to move to one of the three places in the US with functioning public transport systems.

Re: The 'buy now, pay later' bubble is about to burst

#164

Post by Existenceblinks »

senttoschool wrote: post #2

“We found that most of the people that use buy now, pay later either don’t have or don’t use a credit card,” Marco Di Maggio, an economist at Harvard, told me. He said that Gen Z was skeptical of credit cards, possibly because many of them had seen their parents sink into debt. This is always weird to me. It makes sense why Gen Z does this. But weird. I can get 2-4% back on all my purchases using my credit card, incl…

You may pay more than the interest. It's hard to prove the diff of purchase rates between if you have vs haven't had the incentives.

Re: The 'buy now, pay later' bubble is about to burst

#165

Post by Existenceblinks »

nkrisc wrote: post #130
strken wrote: post #30

Earlier quoted context omitted.

It's a hateful little piece of plastic. You carry it around in exchange for 2-4% cashback and fraud protection that should by rights apply to debit cards too, and the credit card company sits there hoping you give in to temptation and actually use the line of credit it represents, at which point they charge you usurious rates and distribute part of their loot to all the other poor schmucks they're conning. I have one…

> and the credit card company sits there hoping you give in to temptation and actually use the line of credit it represents, at which point they charge you usurious rates and distribute part of their loot to all the other poor schmucks they're conning. It is kind of grim when I stop to think about how the probably several thousand dollars in cash-back bonuses I've received over the years of never paying a single cent…

I believe, by design, it's subsidized by production of incentives of spending more in general.

Re: The 'buy now, pay later' bubble is about to burst

#166

Post by tengbretson »

Ultimatt wrote: post #35
ivanche wrote: post #10

Earlier quoted context omitted.

If you can afford 12 payments with interest, you can by definition also afford to save for 12 months and then buy the camera. BNPL and credit card companies are masters of exploiting psychology and especially currently prevailing wusiness and entitlement ("But I want it now!!!1!", "I deserve to treat myself like a king").

Or you can afford the camera outright, right now. What's better out of these options: 1) Buy for cash the camera now. You don't have any cash in hand afterwards, and the camera is depreciating in value immediately as an asset only offset by whatever you do with it. 2) Buy via BNPL with no interest for 12 months, and pay exactly a 12th a month. You have the camera, but you also have 91% of your cash in the bank that /…

Any amount of debt creates a degree of moral liability. The more that your possessions become contingent on the continuation of your cashflow, the less you are able to push back against things that you know are morally wrong. Do you think you would be strong enough to tell your boss "no" if it could mean losing all of your valued possessions?

Re: The 'buy now, pay later' bubble is about to burst

#167

Post by Existenceblinks »

goosedragons wrote: post #13
senttoschool wrote: post #5

Earlier quoted context omitted.

In general all those perks are paid for by rather significant credit card processing fees, which you pay for yourself via increased product prices. The price is the same whether you pay via BNPL or credit card. I get that merchants get charged by credit card companies. I also know that I'm not going to make a difference by boycotting credit card companies. I'd just lose out. Also, BNPL companies charge merchants the…

Yeah. Stores increase prices to account for the higher transaction fees required to support giving CC users 2-4% cashback. Frankly CC reward schemes should be banned. It's just another shitty way for the poor to subsidize the middle class.

And punish normie who don't over spend because they have the same discipline without in-system credit.

Re: The 'buy now, pay later' bubble is about to burst

#168

Post by vel0city »

sebzim4500 wrote: post #161
_fat_santa wrote: post #93

Earlier quoted context omitted.

I see BNPL companies as having two types of customers: those that can't afford the full price and want to pay over time, those that read the terms closely and realized the deal is too good not to take. I took out a number of BNPL loans last year and it was never because I couldn't pay the full price but rather if I was getting the money at 0%, "free money". But I was never the target customer of these places, I was j…

Did that actually work? I just assumed they would find a way to charge me 'interest' by having processing fees or some other scam, so I never used them.

I imagine there are a number of those out there, but I've taken many BNPL deals that were zero fee, zero interest. It truly worked out to be the exact same cost whether I paid upfront or took the BNPL.

I imagine the BNPL people made their money from the same kind of CC fee models and from customers who ended up not being able to stay within the 0% timeline. From my memory it usually had some big fines or interest rates if you couldn't make the payments.

Re: The 'buy now, pay later' bubble is about to burst

#169

Post by jonfw »

UncleMeat wrote: post #159
_huayra_ wrote: post #126

Earlier quoted context omitted.

Maybe I just haven't had the opportunity to buy any big ticket items with BNPL, but the few times I tried it (trying to do the "free money" thing, getting a bit more interest in my HYSA by amortizing the total payment out over time), it just created kind of a financial tracking nightmare. I'd get flurries of emails about how my "pay in 4" payment was about to process....for $13. Trying to keep track of all that for a…

This is my take too. A $10,000 purchase on 0% interest for a year earns you ~$400 in interesting from a money market fund or whatever. I'm in a high tax bracket so $160 of that goes to the government. So even for a large purchase I net $240 in a year. Hooray. Decrease the total cost of things purchased in this manner or increase the number of different things to track (or both) and suddenly I'm paying quite a bit mor…

When you phrase it this way, it sounds very comparable in terms of return to a credit card rewards program

Re: The 'buy now, pay later' bubble is about to burst

#170

Post by jollyllama »

dusted wrote: post #3

I don't get it.. There's a childrens song in Denmark, it's lyrics go, roughly translated "and if you have money, then you can have, but have you none, then you may go!" (it's about buying bread at the bakery).. When I see how people spend money they don't have, I'm always wondering if their parents never sang for them when they were young, or if they are of a particular dim nature. Sure, I can see why some people wou…

Time preference. People can't think in enough detail about the future or prefer pain later over pain now.

What's worse, the entire economy modifies itself to suit the needs of the borrowers. The price of goods increases for people who are paying cash because they are now competing with those who will borrow. Then policy is tailored to their needs via inflationary currency.

There is a reason ancient societies banned lending or had regular debt jubilees.

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