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

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

#201

Post by ceejayoz »

whoisburbansky wrote: post #187
_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…

How does the floor rate make it a less terrible credit card?

Because you're paying interest. My credit union offers an 8% APR; a 10% BNPL gives me no benefit over that.

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

#202

Post by Existenceblinks »

nibbleshifter wrote: post #192
Existenceblinks wrote: post #158

Earlier quoted context omitted.

I see a lot of non-americans comments got down voted very much just because they say they won't take debt. Why is it so offensive?

Makes the Americans feel bad. I don't think Americans understand that their credit card rewards/etc simply don't exist in Europe. There is literally no reason for me to ever use a credit card, it just costs me money.

Yeah there's also non-credit card that has the same fraud protection, contactless, separated balance, plus mobile app that's very fancy that can even pay street food shop.

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

#203

Post by dixie_land »

KineticLensman wrote: post #145
phphphphp wrote: post #140

Earlier quoted context omitted.

Functionally it is substantially different to a credit card. The value of BNPL to businesses is the way that it changes the basis for a customer’s purchase decision, a credit card does not have that same dynamic. The underlying credit mechanism might be a lot like a credit card but the way borrowers interact with it, which is what matters, is very different. The mechanics of a mortgage and a car loan are very similar…

> the way borrowers interact with it, which is what matters, is very different And the differences are?

BNPL is simply credit card with a dark pattern. Psychologically it is easier to justify 25/months for 4 months than it is to justify 100 at once (even knowing you'll pay it back later in installments)

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

#204

Post by grishka »

What absolutely blew my mind about this article is how it considers being in debt a norm. An unspeakable rule of sorts to not even try to manage your finances and save up and all that. Like wtf? How the hell do you function in society if you can't afford groceries and have to buy them on credit? The even more perplexing thing, to me, is why it's so common among Americans to pay for things with credit cards when they have enough money in their account. I'm almost 30 and I've never had a single credit card in my life. Being constantly indebted to someone like that would be a nightmare for me.

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

#205

Post by grishka »

speeder wrote: post #197
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…

Sometimew people really don't have a choice. I personally hate debt and when possible I pay everything with cash up front. My wife got pregnant, and our spending, specially on health was already sky high, so I did 5 months of overtime chasing a promised raise and possible promotion. Then I got fired. My last day of work was mid December. Child will be born soon. (Maybe even today, we are hoping for natural birth). Th…

So you can barely afford your own needs and have no savings, but you decide to have a child?.. No offense, I'm just curious about your thinking and priorities.

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

#206

Post by UncleMeat »

jonfw wrote: post #169
UncleMeat wrote: post #159

Earlier quoted context omitted.

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

The nice thing about a credit card rewards program is that it requires zero mental effort. Some people like spending more effort to do churning or whatever, but I make the same computation in that case and conclude that the extra money isn't worth my time.

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

#207

Post by barbazoo »

wyuenho wrote: post #121
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…

Just because you are financing, doesn’t mean you are buying things with money you don’t have, only financially illiterate people of a particularly dim nature would say that. There are plenty of reasons to delay paying for things as much as possible, especially if the financing has zero cost. Say you bought a new £800 stand mixer on Black Friday. Splitting the costs in 3 allows you to deploy the funds elsewhere, such…

> ay you bought a new £800 stand mixer on Black Friday. Splitting the costs in 3 allows you to deploy the funds elsewhere, such as investing in an index fund, buying bonds or put into a CD account or anything productive to offset some of the cost or if you are lucky, cover it.

Those 0% financing offers only exist because interest rates are extremely low. I don't know about others but you know what else is low these days? The return on my index funds. If I invest those £800 now, I miss out on what, £8 over the course of a year? Compounding that makes very little difference at retirement age but for many of us, the mental overhead to manage these loans and the chance of taking on too much (interest rates will go up again) and making a mistake is just not worth it. Besides, if you BNPL you wouldn't want to park that money somewhere volatile anyway, an index fund, what if interest rates rise and you need that money all of a sudden but your index fund didn't gain anything. All of a sudden you lost money. Maybe I just don't get it, I'm happy to learn if there's a flaw in my thinking here.

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

#208

Post by tail_exchange »

grishka wrote: post #204

What absolutely blew my mind about this article is how it considers being in debt a norm. An unspeakable rule of sorts to not even try to manage your finances and save up and all that. Like wtf? How the hell do you function in society if you can't afford groceries and have to buy them on credit? The even more perplexing thing, to me, is why it's so common among Americans to pay for things with credit cards when they…

I just pay my credit card balance every week. Using a credit card and paying it very often means that my credit score is excellent, which results better deals for my mortgage and also better credit cards with great rewards and no fees. Credit cards also allow you to dispute transactions in cases of fraud, which you can't do with debit cards. If you have a healthy relationship with credit, not having a credit card is actually a much worse deal.

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

#209

Post by wh0knows »

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…

Most of the money made by credit card companies is from the transaction fees paid by the merchant. Credit card companies would still be immensely profitable without receiving a cent of interest.

[Edit] This was my understanding but some fact checking on Google proved the majority of income is from interest payments.

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

#210

Post by wyuenho »

barbazoo wrote: post #207
wyuenho wrote: post #121

Earlier quoted context omitted.

Just because you are financing, doesn’t mean you are buying things with money you don’t have, only financially illiterate people of a particularly dim nature would say that. There are plenty of reasons to delay paying for things as much as possible, especially if the financing has zero cost. Say you bought a new £800 stand mixer on Black Friday. Splitting the costs in 3 allows you to deploy the funds elsewhere, such…

> ay you bought a new £800 stand mixer on Black Friday. Splitting the costs in 3 allows you to deploy the funds elsewhere, such as investing in an index fund, buying bonds or put into a CD account or anything productive to offset some of the cost or if you are lucky, cover it. Those 0% financing offers only exist because interest rates are extremely low. I don't know about others but you know what else is low these d…

So you buy a stand mixer, make a bunch of dough, bake some bread and sell them. Plenty of ways to offset the cost. The how is not important, the important thing is you can. The worst it can happen is you have to pay exactly the labeled price some 3 months later.
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