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.
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.
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.
Or those tv rental shops.
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.
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.
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.
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.
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
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.
Hard to blame them.
Is this actually worse than the five figure credit limits gen x had extended to them? Boomers had store layaway, which really seems ideal for holiday shopping, but there’s no money to be made with it so of course it’s fallen out of style.
five figure credit limits gen x had extended to them
chase gave me a $17K limit before i was even 20 in the 90s. i know more than a few people who would have had that maxed out the next day
Predatory debt gonna be predatory
If were going to slip into a period of hyperinflation then taking on tons of consumer debt is just good financial planning.
Isn’t that only if wages increase alongside inflation
If $1,000 today is worth $5,000 tomorrow, you want to spend that $1,000 today so that when you pay up you only pay $1,000. Even if inflation hits you, you still only owe $1,000 no matter how much actual value those dollars still hold.
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.
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?
In this age where you can quickly spend thousands online (or even in person) without having to actually watch any of it disappear, and corporations are hiring psychologists to make their services and platforms as addicting as possible, you’re gonna get a lot of this
I see everyone in the comments saying that Gen Z have checked out and are waiting for the end but I really don’t think so.
I think it’s never been easier to manipulate a person to separate them from their money and things are deliberately designed that way. Big shiny upgrade now buttons, services forcing you onto 7 day free trials for premium plans upon signing up, expensive yearly subscriptions for products that ten years ago would have been unthinkable as anything other than one time purchases, you name it. Capitalists have used the internet to minmax their penny pinching.
to take this a step further, imagine someone who has been exposed to these services designed to be addictive their entire (digital) life, as well as being pushed further into these services by their peers who are equally addicted and the “influencers” they look up to that are paid by these services.
Yep. It’s seriously remarkable how deeply these fuckers have sunk their claws into our social fabric. Literally every possible tactic they can employ to suck as much money from as many people as possible, have been employed, consequences be damned no matter how severe. This cannot be allowed to continue
Yo dawg I heard you like installments:
Recently I noticed my credit card lets me move transactions into installments. So, you can put an installment into installments now. When you go bankrupt you can pay off your debt in installments too.
Why isn’t this framed as predatory lending?
For the same reason that the subprime mortgage crisis wasn’t; line go up.
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.
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 $0.12 raise you’ve been asking for.
genZ is the least empathic gen i have seen yet. gives me hope future generations can learn from that.ql
I mean, you get out what you put in. Is it a surprise that a generation that’s growing up in a predatory world without empathy lacks empathy?
You’ve described all of human history
Yay humanity!
I was more thinking of the uncaring universe than blaming our species.
you think previous times were LESS predatory? like when? back then rape was legal, war was just over, alcoholism …dude, how is it worse?
no. it is always the people themselves. maybe plastic retarded them? i mean swifties dont even allow a discussion on taylors remarks with kanye west. an entire fan generation ignores that she is the culprit.
I swear on everything that I’ve read this article word for word years ago but replace gen z with millenials
Basically reddit 10-15 years ago. The doomsday edging gets stale when you realize things are cyclical. Millennials were supposed to implode with debt by now. An economic cycles or two later and that didn’t happen. Now it’s Gen-Zs turn to be on the brink of doom.
Every single Millennial also had those predatory debit card overdraft fees.
Banks would allow them to purchase something even if the checking account had no money and then hits them with like 25$ for every overdraft. Practice only outlawed in 2010.
God It was this feeling of helpless anger when banks would screw you while u are down. Thanks Obama for fixing that.
Oh it was far worse than that…
They would actually change the order of your transactions in order to maximize the number of overdrafts (and each cost $30+).
For example, say you’ve got $80 in your account. You buy three separate meals over the course of Monday and Tuesday, and you’ve got $50 left in your account. But now you remember that there is that one thing they NEEDS to be paid for, but it’s $75 and you only have $50 on your account.
Well, you have no choice but to make the payment that brings you to -$25, and incur the single overdraft fee. Sucks, but $30 penalty is less than not having Internet for a month or whatever, so you do it.
So to recap: You had $50 left after those 3 meals. You made one single transaction that brought your account into negative, that means one overdraft fee, right?
Nope.
They would literally re-order the transactions, put the largest one first ($75), bringing your balance down to $5, THEN they would process the meals from Monday and Tuesday giving you THREE separate overdraft fees of $30 each.
So now you owe the bank $90 on top of the $25. And that was what the banks sold as, “overdraft protection.”
Shit was disgustingly egregious. Obama made it illegal I believe.
I wish this “overdraft protection” was opt in so people at least have a chance to understand it. I turn mine off, deny my card who gives a shit
They wouldn’t let me turn mine off. The first bank flat out said no, the credit union charged me $5 to draft $100 from my savings. If there wasnt $100 in the savings, they would charge me the $5 to take what was in my savings and the $25 overdraft to cover the rest. There were no other options.
Right, that’s how they fooled people for years. Any normal person would think “overdraft protection” means, “deny the transaction so you don’t overdraft.” But nope, complete opposite.
It was so scummy.
We didn’t have this new term buy now pay later to the same extent, the millenials version just called credit cards credit cards.
“Buy now pay later” has been around for at least a decade. It wasn’t ubiquitous like it is now though. I knew things were bad when I went to pay for 2 pairs of shorts and they asked me if I wanted to stagger the payments. The total cost was $40.
Buy now pay later has been a thing since at least 2006 in the UK (I can find pictorial evidence for this with a flyer with “buy now, pay 2007”). But, I am quite sure I remember seeing this in the 80s and 90s too. For sure most large stores had their own credit systems that worked this way.
It’s not a new term, and actually I’m going to say that predatory techniques were more common in the 80s and 90s. People were definitely financially illiterate then too. Store credit was very common, I remember a very common APR was 29.9% with some pretty long terms on too. And the store credit system was of course designed in a way you could keep adding purchases, so you were ALWAYS paying this 29.9% year on year.
I think the only real difference was that with payments being far more physical without the internet. You could feel when you borrowed too much and people would cut back before reaching truly unrecoverable situations.
Point being, this isn’t a new thing. The virtualisation of everything I think has just made it much easier for young people now to get into situations they cannot easily get out of.
In the 80s and 90s you could easily get multiple credit cards. But usually you needed to go out and get them, or at least fill in paper based applications. There were also definitely less institutions offering them. So there was a real hard limit. Now there’s all kinds of ways to get credit. However, there’s few real large institutions at the top and I think they really should be coordinating centralised credit limits better.
My summary is, this isn’t new. Just the modern world has made it very easy to make it scale into higher debts now than it did before. That’s the only real difference.
The average youth of the 80s and 90s were not better at this IMO. (person that grew up in the 80s and 90s speaking here). There were just less opportunities pushed into your face.
You don’t have an Aaron’s or Rent-a-center in your town? I’m a millennial and half my formative years were spent on a rent-a-center couch and bed. Half my belongings in my first house were rent to own, now that i think of it. I spent a lot more because of interest and scams but i had zero financial literacy then and i needed furniture. Without a credit card your options were/are limited.
Never pay them anything back!
The absolute irony of the paywall
lol time to write an article vilifying young people who somehow aren’t thriving in our flawless economic system. What self-indulgent idiots they are. Where’s my Pulitzer?
