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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

#261

Post by wyuenho »

barbazoo wrote: post #260
wyuenho wrote: post #247

Earlier quoted context omitted.

If you parked the money and it lost value, it doesn't matter, because that's only relative to everything other than the stand mixer you bought. The price of the stand mixer is fixed at the time of purchase, it doesn't go up as time goes by.

I don't get it. If you bought the mixer and paid for it a year later but a year later when you have to fork over the money and it's suddenly not 800 bucks anymore but, say 750, you need another 50 bucks. So you spent 850 instead of 800, no?

The amount of what you owe is fixed at the time of a 0% interest BNPL purchase, just like a real purchase. Even if the interest rate is not 0, it’s still fixed.

It’s not a margin account where you have to call it if the value dips too low over time.

What in such simple concept is so hard for you to understand?

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

#262

Post by Ultimatt »

ivanche wrote: post #59
Ultimatt wrote: post #52

Earlier quoted context omitted.

Because I assumed you'd understand the depreciation of the asset is a lot less than the appreciation on your investments or cash that you can do in the other scenarios. The entire point is its offset. Also that's not a business asset description, thats just normal life??? WTF buys a camera and doesn't offset some of the cost doing their mates wedding? You're not thinking rationally if you think using the credit syste…

Moral aside of shooting mates' wedding and charging for it(!), but as soon as you use equipment to earn it's a business/side gig. You may not like it but I'm sure tax authorities of any sane country will disagree with you. For the rest I actually agree with you and think credit system is predatory and that if one can, one should take advantage of it. Just that buying something on credit because want, and using that s…

Dude what world (or country) do you live in? Im in the UK and everyone has a £1k self employment allowance, that gets you quite a nice camera! Filling out the return is trivial.

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

#263

Post by jacobsimon »

clintonb wrote: post #131
jacobsimon wrote: post #116

Earlier quoted context omitted.

> Whenever you see a BNPL offer for 0% it means the merchant is paying the interest on behalf of the consumer. I don’t think this is true - the merchant pays a transaction fee (around 3-5%) with companies like Affirm or Klarna, which is not much different than typical credit card fees. The merchant is not paying an interest rate or liable to pay more if the customer fails to pay on time.

You’re on the right track, but have the wrong specifics. A merchant accepting card payments might pay “sticker rate” for processing, 3%, at the outset; but, they eventually get IC+ pricing as their volume increases. This might be closer to 1-2%. If they pay 5% to a BNPL, that extra 2-4% is meant to cover the interest of the “loan” if the customer doesn’t pay back on schedule.

Sure but the merchant isn’t literally paying interest - yes they get charged a fee which helps subsidize an interest-free loan, but that fee is not interest nor is the merchant party to any loans that the consumer enters. The merchant gets paid more or less immediately minus a fee - similar to how a credit card transaction works.

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

#264

Post by Ultimatt »

kortilla wrote: post #62
Ultimatt wrote: post #38

Earlier quoted context omitted.

You then pay off your outstanding debts if you think there is risk you will be paying out more in the near term... That's why you only carry debt when you could otherwise afford something. Literally thats the point. Realistically though its even better if you lose your job because you have the cash in the bank you would otherwise have sunk into an asset. I just quit my job to be self-employed and have a bit of a care…

You can’t pay it off if you weren’t able to afford it up front. You’ve changed the scenario from “I can’t afford the full cost but can afford monthly payments” to “I can afford this and am using monthly payments as an interest free loan”.

Go read what I said, the premise was you can afford the item outright but it still doesn't make sense to if you have interest free credit available.

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

#265

Post by Amezarak »

hyperman1 wrote: post #246
throwaheyy wrote: post #244

Earlier quoted context omitted.

This applies to more than just banking. They were the first to innovate. Thus they get stuck with first generation technology while other countries leapfrog ahead. Example: back in 2009 I got an American Express card with contactless technology. It was one of the transparent cards with the blue square in the middle so you could see it right inside the card. Problem was, no store had a terminal it could be used with.…

There is more to it than that. Europe tends to write laws with consumer protection in mind. The US tends to treat companies and people as equally powerfull, with the courts protecting both. After decades of different legal philosophy, we see these differences: Europe tends to be a whiney nanny state, but lacking enforcement means companies can violate legal rights for years and then be very surprised when they get sl…

Precisely the advantage of credit cards is that your money can never be stolen, only the bank's money. People keep talking about fraud protection, but that's the difference between a debit card and a credit card. When your debit card or actual bank account information is stolen or used fraudulently, your money is gone, until the bank deals with the situation. When your credit card is stolen, the bank's money is gone. You never owe it, you never pay for it, you have exactly the same amount of money you had before the card was stolen. You're not suddenly short money until some process runs to completion. You are at most dealing with the inconvenience of not being able to charge that card anymore until you get a new one.

A surprising amount of people also get away with spending the bank's money and never paying them back, which I suppose some people also see as a benefit. They probably do pay enough late fees, interest, etc. in their life that the bank comes out ahead anyway, but I know multiple people who simply didn't pay on a credit card - ever - and nothing happened to them, other than a few-years credit hit that didn't stop other companies from continuing to offer credit.

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

#266

Post by _huayra_ »

UncleMeat wrote: post #206
jonfw wrote: post #169

Earlier quoted context omitted.

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.

Paying without a credit card is just supporting the credit card fees of those who do pay with one. The price is the same, but you often get 2 or even 3% cash back (depending on offers).

Anyone financially responsible (i.e. that won't get enticed into carrying a balance by the opportunity to get cash back) is leaving money on the table by not using a credit card (with good rewards).

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

#267

Post by Sakos »

pandaman wrote: post #259
Sakos wrote: post #253

Earlier quoted context omitted.

Does it matter? Even if he only gets half the price back, that leaves 1500 left of the debt he has to pay out of pocket. If he's paying monthly for the camera, he suddenly has a $4000 bill on top of whatever of the $5000 debt remains unpaid. I think I'd rather be in the former situation.

Even if not having any debt is extremely important to you then you are still out of 2500 on your camera transaction, which is pure loss here. However some people consider not just an amount of debt but its other qualities too and for them having debt of $5000 with 0% APR might be preferable to having $1500 debt with, say, 20%+ APR. At the end you need to count a monetary balance and compare a ($2500) loss on camera t…

> If math is hard

Get fucked, mate.

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

#268

Post by hyperman1 »

Amezarak wrote: post #265
hyperman1 wrote: post #246

Earlier quoted context omitted.

There is more to it than that. Europe tends to write laws with consumer protection in mind. The US tends to treat companies and people as equally powerfull, with the courts protecting both. After decades of different legal philosophy, we see these differences: Europe tends to be a whiney nanny state, but lacking enforcement means companies can violate legal rights for years and then be very surprised when they get sl…

Precisely the advantage of credit cards is that your money can never be stolen, only the bank's money. People keep talking about fraud protection, but that's the difference between a debit card and a credit card. When your debit card or actual bank account information is stolen or used fraudulently, your money is gone , until the bank deals with the situation. When your credit card is stolen, the bank's money is gone…

There was a credit card attached to my bank account. If I buy something, the money disappears from my bank account on a fixed day of the month. I have no idea about how to influence that payment, and it seems not available in the web UI. I have no idea how not to pay that money, or how to dispute charges with it. Presumably I can visit the bank. But it has no chip and pin, so if anyone has the number and means ill, my money disappears. So it basically behaves like a very insecure debet card with a delay, i.e. I have to manually validate the payments corresponds to what I've done every month. It mostly seems a hassle to me. As I have no credit score that I know of, I also have no idea about how the bank wants to punish me if I don't pay them. I got it in the past to buy stuff from US websites, but payment processors accept my other means of payment by now. In fact, it expired over a year ago and I never saw a need to renew it.

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

#269

Post by barbazoo »

wyuenho wrote: post #261
barbazoo wrote: post #260

Earlier quoted context omitted.

I don't get it. If you bought the mixer and paid for it a year later but a year later when you have to fork over the money and it's suddenly not 800 bucks anymore but, say 750, you need another 50 bucks. So you spent 850 instead of 800, no?

The amount of what you owe is fixed at the time of a 0% interest BNPL purchase, just like a real purchase. Even if the interest rate is not 0, it’s still fixed. It’s not a margin account where you have to call it if the value dips too low over time. What in such simple concept is so hard for you to understand?

BNPL suggests that it's better to take the 0 percent and pay off the 800 bucks, say, 2 years later and park the money somewhere accrueing interest.

All I'm saying is if you're getting a 0 percent loan for the mixer, interest rates on your savings are not going to be great either and returns on index funds are not going to consistently go up either. It's not unlikely that you end up with your 800 bucks turning to 750 after 2 years but you still have to spend 800 for the mixer after 2 years. 800 you put in at the beginning, 50 you have to chip in at the end, you just paid 850 for that mixer.

> What in such simple concept is so hard for you to understand?

Be better than that!

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

#270

Post by Amezarak »

hyperman1 wrote: post #268
Amezarak wrote: post #265

Earlier quoted context omitted.

Precisely the advantage of credit cards is that your money can never be stolen, only the bank's money. People keep talking about fraud protection, but that's the difference between a debit card and a credit card. When your debit card or actual bank account information is stolen or used fraudulently, your money is gone , until the bank deals with the situation. When your credit card is stolen, the bank's money is gone…

There was a credit card attached to my bank account. If I buy something, the money disappears from my bank account on a fixed day of the month. I have no idea about how to influence that payment, and it seems not available in the web UI. I have no idea how not to pay that money, or how to dispute charges with it. Presumably I can visit the bank. But it has no chip and pin, so if anyone has the number and means ill, m…

+ it is generally possible to set up autopay for credit cards in the US, but it is not the default and I have never seen it not be very obvious on how to turn off. There's regulations about this in the US.

+ US debit cards and credit cards virtually all have chip and pin, but you can use only the number as a fallback for things like over-the-phone or Internet transactions, so it doesn't do much good. Terminals do usually require the chip, which presumably hinders skimming. AFAIK the old stamp machines are even still supported, though I haven't seen one in a while.

+ disputing charges on US cards generally consists of 1. login to the website 2. select the charge / hit the hamburger menu next to the charge 3. click dispute transaction.

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