Burrito Now, Pay Later

Post by twoodfin » Mon, May 12, 2025, 7:16 AM UTC

recursive wrote: post #99

kweingar wrote: post #54

I keep hearing people express dismay that people are financing their lunch, sneakers, or concert tickets. But this has been the norm for a while, no? I can't remember the last time I didn't utilize credit at a restaurant or retail store. If you use credit cards, it doesn't make sense to reflexively admonish people for using BNPL for everyday purchases. To be sure, BNPL is in many ways a predatory innovation. But it i…

A lot of people use a credit card like a debit card with fraud protection. You can pay off the balance every month and still get a benefit. The UX of paying is so smooth. Maybe that's possible with BNPL too (learned a new acronym today) but I haven't heard of it. If there was a thing that worked like a credit card, but without the credit part, I'd probably be using that instead.

Post by immibis » Mon, May 12, 2025, 7:43 AM UTC

sgerenser wrote: post #158

dmayle wrote: post #33

Earlier quoted context omitted.

This is a bit of an exaggeration, but otherwise correct... Alice has $100 in burrito debt at 0%, but misses one payment, which automatically reverts to a 30% interest rate, back-tracked to the start of the "loan". She also receives a $7 late payment fee, which is equivalent to about 90% interest for the time covered. Her bank will often re-order operations on a given day in order to maximize the fees charge (yes, thi…

I believe reordering of transactions to maximize NSF fees was made illegal by the CFPB, but Trump recently rescinded the rule.

Post by immibis » Mon, May 12, 2025, 7:55 AM UTC

aaaaaaabbbbbb wrote: post #167

ivanbalepin wrote: post #165

Enjoyed the article, but the author was correctly questioned in the substack comments how is this any different than a credit card for the borrower and what justifies the "interest-free" myth here, since the BNPL payoff period largely overlaps with the CC grace period. To which the author responds: > Credit card float only lasts if you pay the full statement balance by the due date but that is identical to BNPL, it's…

Assuming one has access to a credit card and is financially literate, I agree that using BNPL is a hard sell (never having used it myself). But there is a large population--the unbanked--that lacks access to credit cards. For that population, the choice is not between credit card and BNPL, but BNPL and cash. I found the article's description of how BNPL structurally differs from credit cards interesting, as it is a r…

Post by mmillin » Mon, May 12, 2025, 8:14 AM UTC

twoodfin wrote: post #202

yreg wrote: post #196

Earlier quoted context omitted.

Convincing people to finance their groceries is absurd. Ideally, everyone should have a few months’ worth of income saved. And if they do, there's zero reason to finance a burrito. In the Western world, if you have a job but no savings buffer, it’s usually not due to extreme poverty—it’s often a lack of basic financial literacy. Klarna, et al. market in direct opposition to that education.

I finance all my burritos: It’s fantastically more convenient than cash, incrementally builds my credit rating, & I capture some of the efficiency surplus via rewards points. The article makes the point that BNPL packages up almost the same product into a bite-sized, low-risk (for both the borrower and the lender) package, making it available to everyone. Indeed, that does sound like a good thing.

Post by yard2010 » Mon, May 12, 2025, 8:26 AM UTC

dalmo3 wrote: post #162

calmbonsai wrote: post #113

"This logic doesn’t change just because the thing being financed is a burrito." Yes, it absolutely _does_ change. One might as well go all the way and start offering Oxygen or Water bonds. The immorality masking as morality here is insulting--not related, mortgage-backed CDOs during the financial crisis and "Pay Day" loans. There are many, many fundamental individual needs and items (economic "utility") that, while f…

You're right, financing a burrito is amoral. So what?