KingU.S. consumers are so fucked up, that they put more than $1 billion on buy-now, pay later services during Cyber Monday
Dr. WeskerMan, say what you will about credit cards, but at the very least with many of those you get rewards of some sort. BNPL is just the consumer version of the payday loan; you get nothing but the scam.
ExulionIdk, I do them when there is no interest involved. Like my credit card I only do it when I have the money though.
Are many of them no interest?
PogogunnerI’m not a BNPL user, but my understanding is that most are interest free (to attract more users) unless a borrower is late/misses a payment.
I assumed that was the trap, or retroactive interest. Just seems to prey on those already at financial disadvantage.
The BNPL company also charges the merchant much more than a credit card company does. Something like 6%. So they’re also making money on people who do pay in full at 0%.
The theory goes that the merchant is happy to pay the higher rate because it makes a sale happen that otherwise wouldn’t. Unfortunately that increased cost just gets added to the price everyone pays.
PayPal Pay In 4, Paypal 12 months (sometimes), Amazon Affirm, all no interest. Unless you miss the payment. Then bend over for it. Interests rates vary from 8 percent to 32 percent retroactive, depending on who you get it through. I’ve used BNPL several times, but always made sure I can afford the payment in the monthly budget, and only when it is zero interest.
skankhunt42For what reason? Am I missing out on something?
Seems like it’s better to just pay now if you have the cash.
if you have the cash
And there’s your answer.
daed
PlatypusAssuming you need to buy the product, taking on zero interest debt gives you greater liquidity that you can theoretically activate elsewhere to improve your cash flow. For the amounts and time scales of BNPL, though, I don’t entirely see the point.
For the amounts and time scales **hard inquiries of BNPL, though, I don’t entirely see the point.
FTFY
Most BNPL services don’t make classically hard inquiries, though - as I understand it that’s actually a big part of the problem, because they are able to skirt a great deal of the credit regulations put in place to prevent predatory lending (yeah those exist - fucking terrifying, isn’t it?) by not engaging directly with the credit agencies, instead relying on 3rd party consumer information data brokers of dubious reliability.
I don’t do this for many things but i do use it sometimes
I’ve used care credit because a single emergency vet bill can be pricey and while I could empty my savings that’s not the best idea. So I just pay it off within the promotional period. Worse case scenario I am in a position to secure a traditional personal loan to completely pay off that balance at a more favorable interest rate.
I used a 0% intro rate for a European vacation once and it was great paying that off over a year.
That being said I wouldn’t finance groceries or Christmas shopping. That’s going a bit far
Eh, mostly just because less money coming out of my account at once feels better and there isn’t a downside really. It’s mostly like Amazon’s pay in 4 etc, especially if I think there is a chance I might return it. I would not ever not pay it off and incur fees. Its nothing special, I don’t touch afirm though generally just Amazon and paypals short duration things.
I got a car loan once even though I had the cash to buy outright. I didn’t want to drain my savings and end up high and dry if there was an emergency. It was worth it to me to pay a little interest so I still had a cash buffer.
If I were living paycheck to paycheck like many folks are, I imagine the logic would be similar for smaller purchases.
The rewards are there to keep you make them money.
Some one has to pay for the rewards and the multi billion dollar companies usually don’t give money away for free without some plan. In the end, the consumer pays for the rewards because they add it on the product price.
Yeah, the card issuers are already making bank from the interchange/issuer/processing fees, as well as interest if the customer eventually isn’t able to pay their full balance in time.
But if you’re a perfect person and always pay your full balance every month, there’s literally no negatives with a credit card as a normal consumer. It’s usually even a better alternative, as if something goes wrong, a credit chargeback is much quicker and easier than a debit chargeback.