'Buy Now, Pay Later' Lenders Pitch Loans For Needs Like Electricity and Rent (nytimes.com) 129
An anonymous reader quotes a report from The New York Times: Buy now, pay later" loans took off during the pandemic as a way for online shoppers to go on retail splurges without using a credit card. Now, lenders are offering the loans as a means for people to finance basic households needs. The lending apps Flex and Zip allow customers to take out loans to pay for their broadband, electricity, health insurance, mobile phone service, mortgage and water bills. Affirm, one of the most popular pay-later apps, has started providing some tenants loans to extend their monthly rent payment for a few weeks. Many dentists, veterinarians and medical clinics now often offer instant pay-later financing, and Intuit this year started promoting "File Now, Pay Later" loans to TurboTax users who owe money in their tax return.
Pay-later loans are becoming the "working capital for the modern middle class," said Karen Webster, the chief executive of Pymnts, a news and market research company for the payments industry. "Consumers are using it more for essential, everyday things." Americans spent $160 billion last year through pay-later loans, according to research released recently by Federal Reserve economists -- nearly twice what consumers spent two years earlier, in 2023. That's still a fraction of the more than $3 trillion U.S. shoppers spend annually on consumer credit cards. But the industry continues to expand by double-digit rates each year.
How much of that growth reflects consumer preferences, versus desperation, is a question economists and industry analysts are trying to unravel. The rise in pay-later financing comes as many households are leaning more on debt to keep up with their daily expenses. Paying interest -- to afford basic needs -- adds to the overall cost of living, which has already been rising amid higher medical, housing and fuel costs. For many borrowers, the loans have become their only option: Half of those using them said they could not make ends meet otherwise, according to the latest edition of a survey that LendingTree, a loan marketplace, has compiled for years.
Pay-later loans are becoming the "working capital for the modern middle class," said Karen Webster, the chief executive of Pymnts, a news and market research company for the payments industry. "Consumers are using it more for essential, everyday things." Americans spent $160 billion last year through pay-later loans, according to research released recently by Federal Reserve economists -- nearly twice what consumers spent two years earlier, in 2023. That's still a fraction of the more than $3 trillion U.S. shoppers spend annually on consumer credit cards. But the industry continues to expand by double-digit rates each year.
How much of that growth reflects consumer preferences, versus desperation, is a question economists and industry analysts are trying to unravel. The rise in pay-later financing comes as many households are leaning more on debt to keep up with their daily expenses. Paying interest -- to afford basic needs -- adds to the overall cost of living, which has already been rising amid higher medical, housing and fuel costs. For many borrowers, the loans have become their only option: Half of those using them said they could not make ends meet otherwise, according to the latest edition of a survey that LendingTree, a loan marketplace, has compiled for years.
Welcome to The Future! (Score:4, Insightful)
Re: Welcome to The Future! (Score:5, Insightful)
All I see is a bubble getting so thin that the 1929 crash will be repeated.
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Re: Welcome to The Future! (Score:5, Informative)
Food and utility prices are outpacing wages and it's due to pure greed. I mean look at the chart in regards to groceries. https://fred.stlouisfed.org/se... [stlouisfed.org]
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I don't disagree with that and the income inequality in the US is now at 1929 levels, especially the top 0.1% has had a remarkable rise.
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Inflation could be massively reduced if the Federal government would balance the budget instead of printing more money.
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You mean the inflation chart? I don't see an axis for greed.
You don't see child rape either, at least, not as a problem.
I wish I could tell you to stop playing stupid, but it's obviously not a game.
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Answer me this.
What party controls all three branches of government?
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The GOP only seems to care about reigning in spending when a Democrat is in the White House. The Democrats seem to care never. The end result is lurching from overspending to shutdowns, with the problem never getting solved.
I'm thinking we need a new amendment that says me
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I love your idea at the end, but then they would just have us in a "declared war" forever. As it is, we're kind of constantly involved in armed conflict as a country almost all the time anyway.
Still, I like the idea. Shame Congress would just vote itself a raise.
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Secondly, printing more money is one source of inflation but it is certainly not the only one. Inflation also happens when demand for products goes up and/or supply goes down. The increased demand for goods and services after Covid generated price increases that corporations have latched onto and refused to let go of after the surge has subsided. The war in Iran is causing a shortage of fuel a
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And while you're completely right that many things are involved in inflation, the government borrowing over a trillion every year is probably the primary driver. Our debt goes up, interest on bonds goes up, then everything goes up.
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And while you're completely right that many things are involved in inflation, the government borrowing over a trillion every year is probably the primary driver.
Yes, government borrowing needs to be reduced. But what's probably more important is that they spend what they borrow on things which increase the country's ability to service that debt.
Engaging in spurious wars, funding a genocide in Gaza, building a ballroom / bunker, hiring and equipping ICE agents, and enabling a president to profit in the billions from clearly illegal activity - all of these things, and more besides, are equivalent to setting piles of money on fire.
On the other hand, going into debt to
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--support a livable minimum wage,
There's no such thing. If you don't freeze the cost of housing, food, clothing, electricity, water/sewage, trash and Internet access, then a "livable wage" can never exist because anything extra will get absorbed.
Even if you provided a livable wage, people would still live beyond their means, so it wouldn't matter anyway.
The rest of your list, yes that would be helpful. Just forget the livable wage. It's diametrically opposed to capitalism. While capitalism may have it's problems, it's done more to lift the
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--support a livable minimum wage,
There's no such thing. If you don't freeze the cost of housing, food, clothing, electricity, water/sewage, trash and Internet access, then a "livable wage" can never exist because anything extra will get absorbed.
I don't get that. When costs go up, wages go up. There's no reason not to include minimum wage in that scheme. Yes, it's a kind of rat race - that seems to be the nature of economies. My old sig seems relevant here: "The Economy is a giant Ponzi scheme whose most pitiable suckers are the youngest among us and the yet-unborn".
I also think the experience of many Europeans contradicts your contention. People working in food service industries in some countries there enjoy paid vacations which some US tech work
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One does not need to borrow money, if they have enough money to pay for basic needs, power, water, gas, sewage, and trash are absolutely basic needs that anyone on any pay should be able to afford.
Instead we have an increasing inflation, with a bare minimum wage that continues to stay at the lowest level related to inflation, thereby increasing the wealth gap and increasi
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Your post is a load of excuses for the average person. The fact is, the average income is enough to survive on. People living beyond their means is the problem here. Their inability to delay gratification leads to this. Add in some FOMO and insta-tok influencers and people will gladly spend when they are already broke.
The fact that credit is so easy to get here is just a financial trap that is somehow legal. The loan industry will gladly let you bury yourself in debt. You can't expect them to care about you
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My message was clearly not about "average household income". These things are designed to prey upon those who have little money.
Your inability to understand my post is a solid reason why we have these issues. You can only relate to your life, not others.
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You got my vote to ban predatory loans. This is preying on the poor choice makers.
And I work in a grocery store, for what it's worth. Half these folks double down on bad decisions every day. They are the same people that will bitch about not getting enough hours then laugh in your face when you offer them additional hours on the fly. I've personally offered to go home early and give my hours to a part timer but nope, he'd rather just go smoke pot and sit on his ass while his wife works full time. He also ca
Re: Welcome to The Future! (Score:2)
Sooner or later mass default will become a systematic threat. This is a sign of businesses trying exotic products to fight deflation. US consumers are overextended and underpaid relative to the cost of living. This will not end well.
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We don't have deflation. We have inflation. Huge difference. A quick search reveals that the last major deflationary event was "The Great Depression". We have inflation and it's not getting better.
As someone with CDs and treasury bills, I could only wish for deflation. Imagine leaving your money sitting in a savings account and it actually made you money? It would be a savers dream.
Of course, government hates that idea. Every time a dollar changes hands, greedy government takes a cut. Inflation is the mecha
Re: Welcome to The Future! (Score:2)
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Speak for yourself. I've no debt and over an 800 credit score. I also barely make the national average while living in San Diego and I live alone. Maybe people need to stop FOMO'ing and attempt to live within their means?
Don't think I don't have a life either. I'm literally going to a concert tomorrow (yay, 311 and Dirty Heads). Got a great price for lawn seats and a chair rental that's more comfortable then the stationary seating that cost more then double.
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Re:Welcome to The Future! (Score:5, Interesting)
I'll be the first to say it: You will own nothing and you will be happy.
It's all the "winning" - driving this K-shaped economy. Brought to you by ... well, you know who.
Re:Welcome to The Future! (Score:4, Funny)
Putting that guy in charge was like finding a handful of the biggest, fattest and hungriest leeches you can and using them for blood-letting to treat pernicious anemia.
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The US is simultaneously wealthy and very stupid, deliberately blinded in some ways.
And, contrary to what the wealthy would assert, wealth and brains/smarts/intelligence doesn't always go hand-in-hand. If Trump hadn't gotten $14 million from his father [wikipedia.org] and taken over his father's business, he probably wouldn't be anywhere near where he was before getting elected, perhaps selling used cars somewhere - no offense to used car sales people. :-)
re: K-Shaped economy (Score:2)
For what it's worth? The "K shaped economy" is something not all economists think is a "new normal" for America.
https://www.pbs.org/newshour/e... [pbs.org]
It's at least one possibility that the "K" is staring to reverse course a bit, with the "legs" of the K starting to move closer together again? "Income inequity" isn't necessarily a thing that needs to be stomped out/removed. But it's really important that the low to middle income people don't continue on a downward trend of losing purchasing power while doing the
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An Earned Future, is Earned. (Score:4, Insightful)
I'll be the first to correct you: Those who value nothing, are the people who will be happy about owning nothing.
The rest of us are quite pissed about the idiotic concept.
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Owning nothing is extreme I'd admit. But the current personal goals of just making sure you have more than everyone else is not working, at all. There is only so much an individual 'needs" when the needs of others are considered.
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I'll be the first to correct you: Those who value nothing, are the people who will be happy about owning nothing.
The rest of us are quite pissed about the idiotic concept.
Nihilists?
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How the fuck do you own electricity? This slogan shouting is so dumb.
Re: Welcome to The Future! (Score:2)
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I'll be the first to say it: You will own nothing and you will be happy.
to pay through your nose for the priviledge.
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That's not a situation most people come back from a few bucks lighter and wiser. It's a tar pit intentionally designed to trap the most financially fragile members of our society into a lifetime of misery via parasitic rent seeking. If you can't afford food this week, you can't afford food plus interest next week, and let's not play dumb to the contr
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This article makes it out like the "average" person is struggling. No, they aren't. If they are, it's their own fault. The national average goes much further outside of California, yet some how I live in San Diego, makes LESS then national average, yet still have no debt, near perfect credit score and I live alone.
People that live beyond their means are always going to struggle. It's not an income problem. It's a decision making problem. You got fucking idiots making 100k and are still are broke. No excuse
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That was always said to those that had a pile of savings that they could never spend before they die. Well, the modern vernacular is to mean pile up all the debt you want because when you die it also doesn't matter.
The economy is doing great though (Score:1)
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The fundamentals. You haven't seen fundamentals this fun in a long time.
Fun, ya, but it's "da mentals" that are ruining it for most of us. :-)
Sure... (Score:1)
How 'bout if I buy now and pay after I die?
Re: Sure... (Score:5, Insightful)
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How 'bout if I buy now and pay after I die?
Then you'd be living like the truly rich.
Buy some investments, borrow against them, only pay the interest, leave the investments to your heirs. When you die, they inherit them at their stepped-up value (usually way more than purchased) and pay little/no capital gains taxes when they sell a few shares to pay off those loans against your estate and pocket the rest.
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They are NOT making ends meet (Score:5, Insightful)
" Half of those using them said they could not make ends meet otherwise, according to the latest edition of a survey that LendingTree, a loan marketplace, has compiled for years."
If you are using any loan to 'make ends meet' you are not making ends meet, you are merely delaying bankruptcy.
They specifically mentioned Flex, Zip and Affirm, which can easily reach 20% and even 36%. Basically credit card rates.
It is possible to pay these rates for a short term emergency and then take years to pay it off.
Food, rent, etc. are things you need to buy every week, not an emergency. If you cannot afford it this week, you will never be able to do it. Instead you keep getting more and more debt at these rates until you reach the credit limit, then go bankrupt.
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Food, rent, etc. are things you need to buy every week, not an emergency. If you cannot afford it this week, you will never be able to do it. Instead you keep getting more and more debt at these rates until you reach the credit limit, then go bankrupt.
There are likely special cases (loss of job, emergency medical expense for yourself or loved one, money tied up for a short time) where the money is not available today, but can/will be in the near future. For some people, they might choose to use a credit card in those cases, but not everyone who lives a paycheck to paycheck lifestyle have a credit card, so buy now, pay later, is their only option (a bad option, but perhaps their only option).
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A lot of people have very un-even incomes too. Traditionally those folks build up a cash reserve they draw dawn in the lean time and build up at 'harvest'; but for those starting out they almost always have used either a gift or a loan.
If you are a farmer you have to buy the seed for *at least* your first planting and you won't have income until you have grain ready for market. Some more white collar careers feature these booms and busts too. If you are sales person marketing stuff large business you migh
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Indeed. All this does is significantly increase your running costs and when things finally come crashing down you are in much worse shape. Except for short emergencies, there are no beneficial uses of these loans for consumers.
But that's how Trump did it ... (Score:2)
vote Democratic Socialist in the primaries (Score:2)
There are still a few primaries coming up: https://www.fvap.gov/guide/app... [fvap.gov] If you don't see a DSA candidate see who Bernie recommends https://www.youtube.com/@Berni... [youtube.com]
Don't worry about 'need a moderate to beat Republicans'. This time the two party system works in your favor, many many people will vote for 'who ever is not a
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While there are some merit in that, you have really forgotten who are those, against which so called "imperialistic" wars are being waged off.
Since WWII there have been an informal agreement: USA becomes world policeman to keep an order and prevent large conflicts and everyone in civilized world pays the bill. And they do at the expense of their economy, like Japan.
If USA stops being the policeman of the world, we will soon have WWIII and you still be fcuked up as USA depends on Arab oil. There is a funny s
Re:vote Democratic Socialist in the primaries (Score:5, Insightful)
Since WWII there have been an informal agreement: USA becomes world policeman to keep an order and prevent large conflicts and everyone in civilized world pays the bill. And they do at the expense of their economy, like Japan.
Yeah, that was stupid. You see how that was stupid, right?
If USA stops being the policeman of the world, we will soon have WWIII
This is just stupid. We've never been closer to nuclear war than we are now, and it's Team America World Police that brought us to this pass. Having America be the only threat containing Russia just meant that Russia was free to have a spasm once they got influence over our government.
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We've never been closer to nuclear war than we are now
You're old enough to know that isn't true.
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You're old enough to know that isn't true.
You're not insightful enough to know that it is true.
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Re: vote Democratic Socialist in the primaries (Score:2)
You thought you would snark your way to success with some bullshit as usual and you're upset you got it back? Fuck all the way off, child rape loving hypocrite
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And what is it you think you're doing? From where I sit, you're trying to insult your way to victory over someone who doesn't care if you insult them, and whose victory conditions you don't even know.
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They got nothing now, they had little. What is left is some nukes that are strategically impossible to use due to MAD.
Depending on sanity for peace is insane.
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...and never have to vote again (Score:2, Informative)
Socialism isn't about equality or helping anyone except the entitled scions of the wealthy who don't like the idea of an uppity middle class.
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Nah, I work for a living. Anyone making the national average won't be helped at all. If you are trying, you are not going to get help.
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We had an agreement made in 2015 https://2009-2017.state.gov/e/... [state.gov]
But since Obama signed it and it was successful, the orange tub of shit had to tear it up.
Now the strait is closed until the end of said tub of shit's term.
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So what I'm hearing is that globally we're burning 20% fewer barrels of oil. I bet that sure is good for the environment, which is much more important to me then oil out of the desert half way across the world.
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Honestly, I like your idea. If Europe is to fucking stupid to stop Iran, maybe they deserve it. USA has at least 40 Trillion reasons to stop being world police.
Payday Loans *2 (Score:4, Informative)
Mortgage The Future!
Debt is Wealth!
The current economic system is out of control and on a path of no recovery. AI will create a job apocalypse if it succeeds or market collapse when it fails.
The cost of maintaining the $40T US debt interest rate payments is becoming untenable economically.
The middle class is being squeezed down to the lower class more and more.
The courts have allowed and protected PayDay loans under both administrations and the owners of those companies got elected to public office in Texas also.
Clarana, Zip, Flex, they are all derivative of PayDay loans and are following their play book.
If the current young and middle aged generations don't believe in the future then they don't care about creating unpayable debt if they feel the economy is on the verge of collapse and they won't have to pay anything back.
If there is no Future then there will be no Debt to pay back.
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Unfortunately debt is wealth for those who can manage to convince those who loan money to make those loans to them, particularly if one can find a way to convert the borrowed money into one's personal money while shedding the debts in specially-tailored bankruptcies.
This is partly why there are whole classes of investors that buy struggling companies, separate them into business-units where one unit gets saddled with basically all the debts, sells-off the good bits for profit, and sends the red-ink business
not enough (Score:2)
Now do it for bread and water.
If there is a need for that: /s
The USA is falling apart (Score:2)
Europe isn't doing that well either right now, but you guys are leading the charge. This isn't looking good. Notable parts of the US system need a redo. Europe needs a cleanup. I just hope all that can happen peacefully and without a thug government.
Even for food (Score:5, Insightful)
Putting a Recession..on credit. (Score:2)
Subject line.
’Nuff said.
P.S. - You’ll own nothing, because you never really bought the fucking thing. Stop believing girl math, adds up.
Debt trap (Score:4, Insightful)
Finance a pizza? (Score:3)
My first thought at the time was "oh those Americans are so, so fuuuucked"
If you have to finance a pizza, probably the cheapest family meal you can order delivered, you're in deep trouble financially. If Papa Johns or whoever sees enough demand to actually provide this service, it means a LOT of folks are just hosed.
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I saw an ad during COVID to the effect of a major pizza chain (I forget which) was now offering a eat now/pay later deal for pizza.
My first thought at the time was "oh those Americans are so, so fuuuucked"
If you have to finance a pizza, probably the cheapest family meal you can order delivered, you're in deep trouble financially. If Papa Johns or whoever sees enough demand to actually provide this service, it means a LOT of folks are just hosed.
This is the result of a society that has been addicted to easy credit to the point where they think credit is the same as money.
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Its a trap (Score:4, Interesting)
Using these for running costs just mean you pay more for those running costs. That makes your financial problem worse. It looks like "financial illiteracy" is high and the vultures are circling.
Um (Score:1)
Buy now, pay later" loans took off during the pandemic as a way for online shoppers to go on retail splurges without using a credit card.
I'm not sure how to break this to you, but "making payments on something" has been around forever.
Is that ... (Score:1)
Not a Christian nation (Score:1)
You can tell it's not a Christian nation because of all the usury.
Funny how Christians never seem to want to make one.
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There's at least one other guy who agrees though - https://www.cnbc.com/2026/01/2... [cnbc.com]
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Why do you talk so much nonsense? Disagreeing with you on interest rates means I support child rape? Do you even read the things you write?
Re: Not a Christian nation (Score:2)
I don't read the things you write with care because you support child rape and therefore IDGAF what you think
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Except you do GAF, so you should also care when being sloppy leads to you looking silly.
Of all the people who don't have a leg to stand on in this discussion, you can fuck right off.
unpopular opinion (Score:2)
Given
I submit there are an increasing number of people unqualified to spend their own money.
I see young people (in their 20s) COMMONLY using door dash and buying $8 coffee, who talk about the cool shows they saw on the 5 premium channels they subscribe to.
If you're door-dashing McDonald's, you need your head examined or simply a grown-up to control your spending.
Stupid. pay more in the long run ! (Score:2)
We need Jesus (Score:3)
Where is Jesus to give the moneylenders the beat down they deserve?
Next step (Score:5, Insightful)
The next step is for the lenders to bundle the small loans into securities to sell to investors. They'll say the securities will be safe because they'll be protected with credit default swaps, CDS, that will be sold on the open market. They will get AAA ratings.
Next, you'll be able to trade naked CDS and securitized bundles of CDS guaranteed by investment houses and major insurance companies. This market will be holding trillions of dollars of putative value.
Then a bomb will go off in the lobby of one of the investment houses, perhaps figuratively, and that company will collapse. The CDS will all be called and the trillions will evaporate, and by that I mean anyone who is not a too-big-to-fail entity will lose their shirts. Also, they'll lose their houses.
The treasury will prop up the too-big-fail-entities and, oh, btw, the investments of the political leadership, and by that I do not necessarily mean the elected leadership.
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It is a bomb, the BNPL has fairly high late payments, and it was a workaround for people who either maxed out their CC or had such bad credit they couldn't get a CC. Retailers were dying to keep sales up so enter BNPL where the retailer pays I think a steeper fee to BNPL than to a CC provider.
Another warning shot has been CC late payments have been rising along with total CC debt, now at 1.26T. https://finance.ya [yahoo.com]
pay later (Score:2)
Nothing new under the sun... (Score:2)
Getting into deeper hock to the Company Store... sounds mighty familiar.
Yrefi? So they'll own your ass (Score:2)
These TV ads for Yrefi are just as ludicrous. They're pitching to "accredited" investors, whatever the hell that means, it give money to a company that is pitching mortgages to people who can't pay their existing mortgage. So, let me see if I understand this. Give us your money so we can loan it to other people who can't pay their loans. When the lendee goes BK, they take the house and tell the investor "Sorry, but your investment is now in the toilet." What a racket.
I donâ(TM)t understand (Score:2)
People say that they couldnâ(TM)t make ends meet without the loan but the rates are so rapacious that you spend so much more!
If they just didnâ(TM)t take out the loans they would have more money and be able to cover more expenses.
How about this idea? (Score:2)
"loans to extend their monthly rent payment for a few weeks"
Instead of extending credit with an interest rate benefiting the creditor, how about having the borrower prepay the money and have the creditor pay an interest rate benefiting the borrower. We could call the creditor a "bank" and the scheme a "savings account."
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The middle class? (Score:2)
From the article "Pay-later loans are becoming the "working capital for the modern middle class,"...
Sorry, but fuck you no. Middle class doesn't need to bullshit around with stuff like this. This is predatory loaning that goes after working class and lower income folks.
These kinds of schemes should be illegal but this is America after all.
Usury (Score:2)
Money lenders. How do they sleep...?