Summary
Gen Z is increasingly relying on “buy now, pay later” (BNPL) services for holiday shopping, with spending projected to rise 11.4% this year, totaling $18.5 billion.
These services appeal to younger consumers with limited credit histories but can lead to overextension, as they lack centralized reporting and encourage overspending.
Experts warn of accumulating fees, particularly when BNPL plans are tied to credit cards.
With inflation and rising credit card debt already burdening Gen Z, consumer advocates caution that these services may worsen financial instability despite their convenience.
When you think there’s no future, there’s no need to plan for one.
Gen Z knows that they’re gonna have bigger problems than debt.
What else are you going to do? Save for a house who’s price rises faster than you can earn money?
And meanwhile your bank or brokerage gets to play with that money for a real investment return
And the wage earner’s taxes will be used to bail them out when they make a bad bet
Yeeeup. Socialism for me, austerity for thee
One big recent consequence is it destroys credit short term, like less than a decade.
It’s recoverable, but every one counts as a new line of credit, which automatically gets closed about a year after payment.
So unless you also have a lot of zombie credit cards, it’s going to keep debt utilization waaaay up, number of accounts waaat up, and keep average age of accounts low.
This snowballs, especially if they ever do but a house. If they day ever comes, they’re going to lose alot of money again.
It’s like experiencing turbulence on a place so you scream YOLO and start playing Russian roulette.
If the plane goes down, it doesn’t matter. If it’s normal no big turbulence, then it’s just as much an increase in risk as playing on land.
They assume they’ll have bigger problems, and they may be right. But it’s should still be concerning.
We got a while before kids are unironically bumping this tho
This snowballs, especially if they ever do but a house
They know this will never happen. They’re not buying houses. They’re renting until they die on an overheated planet that no one wants to do anything about. Where one party rolls coal and the other pretends that the inflation reduction act makes up for the harm caused by the record oil production they brag about.
They know they’re fucked, and there’s no reason not to take on as much debt that they can’t pay back as possible.
Why isn’t this framed as predatory lending?
Eat, drink, and be merry, for tomorrow we die.
Does it matter. It seems that a lot of them have checked out already as they see the world burning around them.
This is really interesting. Layaway purchases in stores used to be popular but went away in the late 90’s. It’s back now as BNPL, with much worse terms.
Layaway purchases in stores used to be popular but went away in the late 90’s. It’s back now as BNPL, with much worse terms.
Lawaway is superior. Laywaway had zero interest charges. Some places charged a flat fee, but you also didn’t get your item until the full balance was paid. There’s no chance of a lawaway purchase spiraling into a huge expense. The expense is fixed at the time of layaway and never gets higher. Lawaway also builds the ability to delay gratification, which is an important life skill that is sometimes not common.
BNPL has none of that consumer protection.
Correct me if I’m wrong, but wasn’t the key difference in layaway that you didn’t have access to the item until it was paid off? I remember my mom putting holiday gifts on layaway at Walmart. They’d be kept in storage in the back of the store, and would be given over only after they were fully paid off.
Buy now/pay later plans allow the consumer access to the item now, with a payment plan to follow. It’s much more akin to credit than layaway.
Yes. You had the honor of reserving the item from sale by paying more. BNPL is like the boss in its final form. You can have but don’t own it. Maybe it’s more akin to old furniture places with leases.
In the UK the Littlewoods catalogue is the one I remember. You’d end up paying well over the RRP with a year or two of monthly payments.
Who is teaching them financial literacy in the first place? Because they aren’t being taught it in schools. Meanwhile, these predatory companies do everything they can to convince people to use them.
BNPL services are downright criminally exploitive. The fact that I find Klarna logos on restaurant menus is completely insane.
Taking on debt to pay for large purchases can make sense. Buying a car with cash is impossible for most people, but paying off a car note over several years gives you the chance to buy the car without fronting the cash first.
But this whole industry is built on the idea that you can just borrow from your future self to fulfill yourself today. Quite frankly, if you don’t have the money to eat out at a restaurant, you shouldn’t be taking on debt to do so.
It’s one thing to have a credit card where you pay to improve your credit score, or earn rewards. Ideally you are using credit strategically, even if you’re using it for most/all of your daily purchases. It’s another thing to have a restaurant menu literally tell you that you can “pay for this meal in 4 easy payments”. They’re openly asking you to keep buying luxuries even when you’re too broke to foot the bill.
It’s not just a matter of how big the purchase is. The you next year still who still pays for the car will also still be using the car. The you next month who still pays for the meal would have already pooped the meal.
Also I’ll add that there are some things that feel wrong that they just aren’t prepared for you to pay cash for. My audiologist was shocked when I asked him to put my hearing aids on a single debit payment and we had to break it up into three payments. My car was two payments one a day after the first. I was raised to save up for expenses where possible and avoid debt for anything but cars, houses, and education (and hoo boy did I get a lecture on expected income vs price of degree).
And I have to say that these issues are a combination of systemic and cultural. You don’t get this being so common with it being an individual failing, and you don’t get the situations I’ve described or the issues with debt avoiders getting screwed when we look to get a rare responsible loan without it being systemic. But also you don’t get people casually splurging with money they don’t have without it being cultural. Fiscal responsibility isn’t fun or sexy (though actually I have found a casual partner more attractive for the fact that she has retirement savings and minimal debt), but after decades of propaganda encouraging wasteful lifestyles and fiscal irresponsibility I think it’s time we engage in a multi prong approach to this problem. And that very much includes teaching the average American how to live a more frugal lifestyle while also making sure that they can get what they need (housing, transit, education, community participation, cultural enrichment, etc) at an affordable cost to their income.
I’m going to be brutally honest.
- Corporations are shitstains and prey upon people’s minds and wants.
- People today are too entitled / greedy.
No. You don’t need that phone to survive, solid but low end one will easily carry you next 3-5 years. No, you do not need to go for McD for breakfast - eat a homemade sandwhich. Takes the same amount of time it’d take to get McD served to you.
But today a lot of folk take a lot of shit for granted or worse, needed, and it’s pitiful.
Fuck, that also is due to corporate ads and framing. But people need to wake up and stop fueling this shit on their own. And stop blaming schools - this shit is for parents to teach ffs, like the rest of actual household chores.
Also I am not arguing for everyone to live frugally but instead to learn a mindful way of spending. If you actually have free money, money you own and not a credit, then sure, treat yourself.
Systemic issues can only be solved with systemic changes…
No amount of shaming individuals will fix systemic debt issues, if this is such a large trend that it effects most of the generation then it can only be fixed with systemic changes.
The narrative that individuals are responsible for widespread debt is propaganda meant to shift blame off of the rich people causing wealth inequality to skyrocket
There is propaganda and then there is fact that nobody teaches their children about budgeting and financial responsibility. Do not treat credit like money you own, do not allow yourself to perceive luxury items as something you need, be mindful of what you can actually afford. Today people seem to have problems with these ideas - lack of education on the topic and aggressive ad campaigns by corporations resulted in that.
But while we cannot change masses, we not only can, but we should point this out to as many people as we can. Often all you need to notice something is for someone else to ask question about why that happens. And yeah, sure, maybe helping one or two people won’t make a dent, and even then these people may already be past saving or simply unable to pick up new habits. But if every mindful person tries to help someone else at least once, shift in society is guaranteed. And such shift will result, maybe, in actual change.
And, on a more flat approach - being aware of your own budgeting limits, spending power and how much money you use is not actually yours tends to radicalize people against the rich.
Only systemic changes can fix systemic issues .
This widespread propaganda needs to be countered with grassroots encouragement of more practical relationships with money though. That’s the cultural onus for systematic change. Don’t just shame them, but encourage everyone to live more responsibly and to vote for people who will reign in the creditors spreading this propaganda and loaning easy money to every financially irresponsible person
Without grassroots cultural change anyone who reigns this shit in will face political suicide for taking away their easy lines of credit. We see similar things with things like carbon taxation and other incentives to reduce carbon emissions that involve reducing overconsumption by all people (because yes, the average American is part of the problem too). The elites need to lose the most, but all of us need to live a financially and environmentally sustainable lifestyle and the systemic changes we all talk about wanting will impact our lives.
Only systemic changes will fix systemic issues
Oh wonderful and I suppose we should do nothing to bring those systemic changes about too? No systemic changes begin with changes to our community mindsets. The big creditors want you to not be talking about how they’re propagandizing to convince you to take easy lines of casual credit for fun little splurges and that that’s a trap and you shouldn’t take it. They want you to think that it’s not worth saving money and living within your means and they want you to keep up with the joneses and to make your friends uncomfortable not doing so. And most importantly they want people to feel like any expectation that they shouldn’t get instant and constant gratification is an unacceptable cost. When they get their way systemic change is infeasible. When they are seen as parasites lying to the masses and tricking them into living beyond their means, systemic change becomes possible. Politics are downstream of culture. You can’t change the policy neatly as easily as you can change the minds of those around you
Pretending like individual choices would do anything ignores the fact that these systemic issues can only be fixed with systemic changes
No amount of financial literacy will fix income inequality, we need to redistribute wealth if we want everyone to have the proportional wealth to participate in the economy.
I hate BNPY so much… I deleted my after pay account, which means I can no long use their services unless I get in contact with support to reopen my account. I did it to explicitly make it near impossible for me to be tempted. It worked. There were times I felt regret, but it was 100% the smartest move.
Then, PayPal introduced pay in 4… All my hard work went right down the drain. I can’t afford this shit but fuck it’s hard when you’re clinically depressed.
Services should be required to allow you to opt out of being offered such things. I choose to live a debt minimal lifestyle because of how I was raised, and I don’t want to be tempted. The same goes for online gambling. (And alcohol advertisements, but I do drink).
If were going to slip into a period of hyperinflation then taking on tons of consumer debt is just good financial planning.
This is correct, although usually you’d want to go into debt on something like housing but let’s be honest, that’s not possible. Why not pay an 80 dollar door dash across four payments?
Isn’t that only if wages increase alongside inflation
Oh no. If a fistfull of trillion dollar bills will buy you a shot glass of rice that maxed out credit card from the before time is pointless either way.
If your outlook on life is “work until you die with nothing left over”, might as well take back something first. The debt will pile up one way or another.
It’s all well and good to blame the generation that can’t afford shit to use payday loan companies to buy shit…but when these companies align with the likes of Dominos Pizza to allow you to buy a pizza and pay off in several weekly installments, maybe it’s time to blame prices for being ridiculously high?
Pizza is not a necessity and adding predatory marketing doesn’t help. The whole point is to extract money from as many as possible including the ones that really cannot afford it.
Pizza is not a neccesity but at the end of the day we can’t expect everyone under 30 who doesn’t have well off parents to live on beans and rice. People aren’t robots and while no individual luxury is a neccesity, luxuries as a whole are a neccesity to some degree.
Well when the world is about to end in multiple ways at once, why with about debt?
Predatory debt gonna be predatory
Removed by mod
When is this magical time you think when everyone used cash the majority of the time?
Because I’m 45 years old and it wasn’t in my adult life. I’ve had a debt card to my savings/checking since I was 15 years old. And I’ve had credit cards since I was 19.
Half my friends bought their first homes right after the 2007 crash because mortgages were cheaper than rent. I’ve financed 4 vehicles. I currently have a mortgage.
I’ve rarely used cash for anything in my life other than “vice/sin” (drugs, strip clubs) purchases in order to keep them more private.
I don’t think your comment has any truth to it at all. Nobody’s been relying on cash to get them through most of their purchases since cheques became universal in the early 80’s.
