81–90 of 690 posts
What is the functional difference between BNPL and credit cards that can explain why it’s become popular? A credit card is literally “buy now pay later” so is it just the ease of onboarding?
- No credit checks.
- Longer payment period - usually 2-3 months with no interest.
Earlier quoted context omitted.
Shifting a cost forward a couple months interest free is a great deal for people who are financially responsible, especially if you have some other loan (like a mortgage) that you could be paying off more of instead. It's no different to the practice of using a credit card for everything and then paying off in full a month later because the credit card interest is lower (often zero if you pay off within a month) than…
I briefly looked into this, but I wasn't convinced the juice was worth the squeeze. My cash is automatically getting ~4%, but there's too much fine print to make sure the BNPL rate really is 0%, I'm sacrificing 2% cash back, and missing one payment makes the whole endeavor negative ROI.
I suspect this is where some buyers will get into trouble. Theyll think they made a payment, or they miss a notification that tells them to send this month's payment to servicer X not Y, and before they realize, boom they are in default and owe all the interest.
Earlier quoted context omitted.
For a lot of folks, credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time. Almost none of these people have the kind of collateral needed to use credit to truly transform their lives, and the government assistance for that is seriously lacking in the US (SBA loans are terrible, and you need enough money to cover your own salary un…
> credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time In my experience, the average American has no concept of saving money, and those below average even less. It's funny to me that America gets flak from all over the world for having no social safety net; if this was actually true, you'd expect to see people put aside a bit of…
Furthermore, the common pattern where poorer people spend money as soon as they get it is, in fact, rational when you look at it from their perspective rather than your own (which, as with most people attempting to moralize to poor people about their choices, appears to be a perspective of "you should be doing absolutely everything you can to maximize your net cash flow").
First of all, people need things like little luxuries. A Starbucks coffee here. A joint to smoke there. We are not, and cannot make ourselves, robots who live only to produce.
Second of all, they know, from experience going all the way back to childhood, that if they have an opportunity to splurge a little now and don't take it, they'll lose that opportunity.
Third of all, they similarly know that regardless of whether they splurge on an ice cream cone today because it's 90°F out, whatever financial trouble that comes tomorrow to eat up the little surplus that makes that possible will still put them in debt. Being in debt $150 instead of $145 just doesn't make that much difference. And if they wanted to avoid that particular debt entirely, they'd have to give up 30 separate instances of "I have an extra $5 today, let me get something to make life a little less shitty".
The only solution to the problems that lead to people not being able to save is increasing the amount of money they get paid.
Earlier quoted context omitted.
For most of them, interest accrues from the date of purchased but is not charged if you pay on time. If you don’t, you owe all the back interest from day one.
Ah, that's the scam. Yet another poor tax, then? The rich get interest on money they already spent, the poor get an illusion of safety followed by even more destitution?
The parent poster is confusing BNPL with cobranded cards like Room 2 Go credit cards that have special promotions with “0% for x months”. It’s a regular credit card where the minimum payment won’t guarantee that you pay the original amount off in “x” months, but you only have to pay 2% of the balance. These have always shown up on your credit report.
They are “deferred interest” plans where if you don’t pay the balance off in $x months it will charge you back interest.
Earlier quoted context omitted.
If you're using credit to buy a car, most people do so in order to get to and from their place of work for the majority of their driving time. In that way, using credit to buy a car still fits into their theoretical model. For example I know plenty of people who completely got rid of their cars when remote work became more common, or at the very least consolidated to smaller cars or to less cars for a family. Similar…
No. You can rent and you can take the bus. Or rent and buy a crazy cheap old used car. A house and a decent car are not primarily about making money. They're about your quality of life. > And all recommend not using credit cards and instead an emergency fund if you lose your job. And if you already used your emergency fund on, say, a medical emergency...?
Also what happens when that cheap old car doesn’t start in the morning when you need to get to work or pick your kids up from day care/school or need to be home when they get off the bus?
Where are you going to get the money to fix that old car?
Earlier quoted context omitted.
Not if it shows a bunch of Affirm loans. You could look overleveraged for say getting a mortgage
1. Maybe they are over leveraged, let a bank to decide with all the data. 2. BNPL often has short durations (3 months) so it’s not a long term problem for people with BNPL if they pay it all back.
A bunch of tiny loans does not loom good
Earlier quoted context omitted.
What is the benefit for a consumer to use this type of loan and then pay it back on time versus using a credit card and then paying the card back on time? To me this seems like a new product that would target a different consumer than the one that makes payments on time. But I would like if someone challenges this view. Thanks!
> What is the benefit for a consumer to use this type of loan and then pay it back on time versus using a credit card and then paying the card back on time? Slightly longer repayment time frames. (Multiple months instead of just one.)
Earlier quoted context omitted.
What is the benefit for a consumer to use this type of loan and then pay it back on time versus using a credit card and then paying the card back on time? To me this seems like a new product that would target a different consumer than the one that makes payments on time. But I would like if someone challenges this view. Thanks!
Lower interest because the seller pays the interest
Earlier quoted context omitted.
What is the benefit for a consumer to use this type of loan and then pay it back on time versus using a credit card and then paying the card back on time? To me this seems like a new product that would target a different consumer than the one that makes payments on time. But I would like if someone challenges this view. Thanks!
It’s like layaway. Also you didn’t really need credit before to get them.
Earlier quoted context omitted.
> credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time In my experience, the average American has no concept of saving money, and those below average even less. It's funny to me that America gets flak from all over the world for having no social safety net; if this was actually true, you'd expect to see people put aside a bit of…
You can't individual financial education your way out of systemic poverty. Furthermore, the common pattern where poorer people spend money as soon as they get it is, in fact, rational when you look at it from their perspective rather than your own (which, as with most people attempting to moralize to poor people about their choices, appears to be a perspective of "you should be doing absolutely everything you can to…