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.
(since no one can afford a house even with perfect credit)
They assume they’ll have bigger problems, and they may be right. But it’s should still be concerning.
Why isn’t this framed as predatory lending?
Because Capitalism demands exploitation
doesn’t mean we need to blame people (victims) rather than the organizations
Actually yes. Yes it does.
The poor are poor cuz they don’t work hard.
Can’t budget to help the homeless cuz some of them might trade food stamps for drugs.
If you didn’t want that baby you should have kept your lega closed.
Blaming the victim is as American as genociding the indigenous. Happens all day every day. Because this is the bad place.
It’s not just American, it’s very British too.
Klarna is a Swedish company.
Ah, the great American Dream. Pull yourself up by your bootstraps and work hard to
enrich the millionaires profiting off your laborearn that $0.12 raise you’ve been asking for.After ending genocide at home it just exports it.
I’m not sure because it definitely is.
The whole selling point of services like Klarna is they don’t show up on your credit checks, meaning you can very easily take on too much debt.
For the same reason that the subprime mortgage crisis wasn’t; line go up.
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.
https://www.retailmenot.com/blog/walmart-layaway.html
Walmart actually just stopped layaway entirely in 2021 for BNPL.
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.
It’s almost like the “services” are designed just for this…
Well when the world is about to end in multiple ways at once, why with about debt?
Stuff like this is why the headline Econ stats do not actually reflect reality.
Sure, there’s lots of room for critiquing how the media and the investor class focus on stats that are not actually representative of things on the ground for fairly complex mathematical/economic reasons, but that conversation requires people to have a Masters on Econ to understand.
What does not require this is the much simpler: They do not take personal debt levels and credit scores into account.
People say things like ‘inflation is going up’ ‘i cant afford as much as i used to’ and … the main actual reason for this is usually that they’re drowning in debt, but are either unaware or don’t want to admit it.
This is a country where 54% of adults read and write at below a 6th grade level. Probably a comparable amount can’t actually do their own budget.
…
It doesn’t matter if your wages go up 2% in a year if you had to spend that year buying groceries on credit to not starve, and those all have 16 to 36% interest rates.
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
I don’t think their comment was about shaming individuals, but rather pointing out that there are individual level factors that economists don’t take into account when measuring economic health.
Its not even ‘individial factors’ in the sense that everyone faces unique situations that are not captured by data.
These credit / debt amounts are obviously captured by credit agencies, banks, etc., sold off to data brokers, either anonymized or not.
How else would any credit check occur?
A BLS economist could easily work these in to existing top line numbers, or make a new headline index.
Income Sans Recurring Debt Payments (car, house, consumer debt, student loans, etc)
Average
Median
Percentiles / Buckets / Brackets
Household/Individual
By Age
By Sex
By Location
By Gross Income
By Education Level
…etc.
The data is there. The math is not that hard (for an Economist or Data Scientist).
They just don’t.
It’s lieing by ommission.
I wonder if this research is done but not picked up by media.
I’m honestly not sure. I have the means to check but not the time-energy, unfortunately.
Maybe a few times a year a story makes it fairly mainstream in terms of internet news, but it almost never trends amongst popular streamers / youtubers / podcasts, or airs on TV.
Credit Karma or some other credit agency, or maybe some non profit or academic research will show up, as this article is…
… But the data obviously exists to be able to study and work into a new metric, which could be reported probably at a monthly pace, worst case, quarterly.
Lies, damned lies, and statistics.
The BLS does, I think? have some very rough aggregate stats on consumer debt levels, but nobody reports on it the way business news orgasms every time the jobs print and CPI come out…
Systemic issues can only be solved with systemic changes.
Blaming any individual for their outcome in a system that creates these issues distracts people from the cause of the issues, wealth inequality.
That’s why choosing to obsess over individual choices is totally useless and literal propaganda keeping people from correctly focusing their frustrations
No clue how you read myself shaming individuals into what I wrote.
I was writing to explain why everyone feels poorer than all the headline Econ numbers say we should feel.
Why all the libs who spent the last year or two telling us ‘the economy is fine actually’ were just factually wrong, functionally gaslighting everyone.
If anything, I call out the media, media friendly ‘economists’ and business people for perpetuating bullshit.
Obviously a general explosion in personal debt levels is a general, systemic problem with systemic solutions?
…
I am all for systemic solutions:
Tax the Wealthy / Tax Corporations
Get rid of student loans, do free tuition
Do a total debt jubilee for those below I dunno 200% poverty income threshold
Cap all consumer credit instruments of all kinds at 3x the Fed Rate
Raise the threshold of income for SNAP and LIHEAP and EITC, etc
Implement universal healthcare, outlaw private insurance, lower costs
Raise the minimum wage
Rent control, automatically expunge all eviction records after 1 or 2 years, actually fund building public housing, write a law that says if a house or condo is on market, unsold, you must drop its price by 5% for every 3 months it remains unsold…
Blah blah, tons of things we could theoretically do.
Only systemic changes will fix systemic issues.
