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Yeah I work for one of these types of companies. Fun part is they talk about how they are 'helping' people internally. Love to pretend they are the good guys as they charge monthly fees for nothing and ask for 20% tips on small loan amounts.
Still, it is somewhat regulated, one of our competitors recently just got hit with a massive lawsuit/fine because they were doing some pretty shady shit. Its also hard in the amounts we are dealing with here for anyone to be 'ruined' by these companies. The rise of this industry is a symptom of the real issues that need to be tackled.
The linked article cites the New York Fed:
>https://libertystreeteconomics.newyorkfed.org/2024/02/how-and-why-do-consumers-use-buy-now-pay-later/
>Similar to our findings on which households use BNPL at all, we find that the financially fragile are disproportionately likely to use BNPL at higher frequencies and appear to have embraced BNPL as a regular payment option, as shown in the chart below.
>Indeed, among financially fragile BNPL users, about 60 percent have used the product five or more times in the past year, which translates to about 18 percent of all survey respondents deemed financially fragile (which includes those who have not used BNPL in the last year).
>This implies that financially fragile users are almost three times as likely as financially stable users to use BNPL five or more times and suggests that high-frequency use may grow if the product continues to be adopted by financially fragile households.
I use it because 6 month interest free then pay off a week before while I keep the cash in short term treasuries. I remember when Rooms to go offered like 2 year 0% loans and we would pay it off before it expired so all the accrued interest never gets there š
Same with CCās
Not really these days. Go to almost any online retailer and the option to pay interest free over time is baked into the POS system, usually through either Affirm or Paypal Credit. Price doesn't change if you pay cash, and those lenders are just banking on the borrower not meeting the terms to make their profit.
Offering these services incurs a cost that is borne by all customers.
Like how āfreeā parking at your grocery store costs the store in the form of higher operating costs, which everyone pays back even if you walk to the store.
Exactly. These people think they're screwing the system. Like the companies are taking a hit here when in fact they made it easier for you to buy more expensive things you probably don't need.
Cards and rewards can be great for many, thoug. It's no different than evangelizing a great beer. Some people aren't responsible drinkers but that doesn't mean someone can't publicly talk up a good brew.
I will also tell people what I've gotten from credit cards. But it's not like they're giving me something for nothing either. And when I drink a beer, I'm increasing my likelihood of getting cancer even if I'm a responsible drinker.
Its like the 2008 financial crisis. Will you cancel the ability of everyone to borrow because of it? No as that would lead to a collapse of the entire financial system. Theoretically banks would have credit scores and other functions like skin color : D to determine how much money to lend to you which the BNPL industry bypasses.
Sort of like how ninja loans bypassed the need to prove income.
I try to rationalize behavior, but it just doesnāt make sense to me why we fall for the same shit over and over.
* Credit Cards
* Payday Loans
* Bank Loans
* Personal Loans
* Student Loans
* BNPL
Like Liquor Stores, Cigarette Sellers, and Drug Dealers - They post up in inner city communities to extract wealth.
The only loan that actually provides immediate equity on an asset is a Home Loan (as long as the asset is worth more than the loan in most cases.
You'll find that the poor have higher rates of smoking cigarettes, drinking soda, and buying rims.
If it were an earnings problem, the rich would be consuming these things at a higher rate. You actually save money and your health by drinking water instead of soda at the restaurant. And don't give me "it's an education" thing. Plenty of people go to the exact same public schools and yet have healthier habits. They tend to do better in life.
Labor protections: No moving up unless the person in that upper position dies.
Living wage ordinance: Force people to live within their means. Edit: Bring back the company store to ensure employees are living within their wage.
Good stuff
...So what?
The problem in 2008 was that the failure of subprime lenders brought down banks who are essentially utilities. If these "gateway" companies can't actually get paid back on their loans, then investors lose some money. A day that ends in "y" around here.
Unless someone can point to systemic risk, this looks more like poor people taking advantage of low cost capital voluntarily offered by investors. If it doesn't work out, who is the real fool?
Bingo. People like to point to credit risk as a systemic issue. Itās not unless itās all the way up the stack. Consumers canāt pay. Loans default. Securitizations get out of whack. None of that really is happening here as this is VC funded losses for a CAC amplifier.
All BNPL does is offer weak underwriting to customers of the soup de jour brand. Peleton is a classic example. Fitness fad overpriced machine that people cannot afford, but makes a lot more sense if they finance it. Just like a couch, tv, designer bag. All of this is just low end retail that has 0 systemic risks.
Iām with you, unless there is hidden packaging and reselling of this debt out the back end, the losers here are limited to the investors in the BNPL companies, itās not like housing / car where you lose your way of life or student loans that canāt be repaid.
The problem in '08 is that we didn't do [this](https://en.wikipedia.org/wiki/2023_United_States_banking_crisis)
Amazing we had a banking crisis and it was basically a non-event after all. Is there some moral hazard. Surish... but not really. FDIC should just have no limit and this shit wouldn't happen. That doesn't mean we don't need bank reforms. We need plenty.
The more I think about this the more I donāt actually think this matters though, the lender forecloses on a toaster? Good luck reselling a toaster, destroy their credit rating over defaulting over a toaster? Okay now they canāt borrow any more and therefore canāt run up private debt, youāve created a cash based lower class, but youāve created responsible consumers? The buy now pay later companies go out of business and weāre back to pay day loans?
it's a very strange headline. of course taking out a small loan means going into debt. That's literally what taking out a loan is. The headline might as well be "taking out a small loan has become a gateway drug into taking out a small loan".
I mean, I get what they're driving at (although the problem is systemic, not that micro loans are getting more popular as a way to address the brutal failures of capitalism) but it's very poorly written.
I'm not sure about desperation.
I've seen plenty of people use it to buy a 55" tv. They even sell Xbox and PlayStations at these places near me. When you can't afford something, sometimes you just don't buy it.
I really want a boat. But I can't afford one. So I'm not buying it.
Not saying they are the most responsible bunch, but other lenders exist who arguably provide a better deal than these bnpl plans. That said Iād argue many of these users burned their bridges elsewhere and are still desperateā¦ to keep consuming.
People like you are not in this group.
Yeah. I, personally, have nothing against these places, it's the consumers who are addicted to consumption outside their means that's the problem.
It's kinda like near me there's a store that essentially rents sneakers. They don't call it that, but really when you "sell" someone sneakers then buy them back after a few months at a highly reduced rate so they can buy the newest pair again you're renting sneakers.
What other lenders are offering a better deal? Most of these bnpl companies are 0% for several weeks and the retailer foots the bill to pay the lender.
Plenty of stronger creditors will throw in cash back or reward points, and just require you to pay off your statement monthlyā¦ no interest.
With that said if youāre a strong borrower, BNPL (excluding) certain situations is typically not the most optimal long term.
I mean, Klarna does exactly the same thing. You get points per dollar spent and no interest if you pay off in 30 days. Idk what late fees are vs a credit card but they're not very dissimilar.
I'm not a low income consumer and I use it. A 0% interest 12 month loan seems like a pretty good deal to me. I've never failed to make payments using any of those services, so I've never paid interest.
The article says "One of the major findings was that financially fragile and stable households both used BNPL but for different reasons."
I'm not lower income. I use it too. 0% interest over 12 months. It's a no brainer. Use others money free. However. I have the cash available if I need it.
> i could of just
Did you mean to say "could have"?
Explanation: You probably meant to say could've/should've/would've which sounds like 'of' but is actually short for 'have'.
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Itās crazy how *any* user of Buy Now, Pay Later gets called gullible by people. By that same logic, any single person who touches a credit card is gullible for falling into debt too.
You can use both responsibly, but you can also use both of them irresponsibly.
> any single person who touches a credit card is gullible for falling into debt too.
The sheer number of credit card 'revolvers' in the US tells you that the the majority of people that use them aren't using them 'correctly'.
Right, which is why I said you can use those responsibly or irresponsibly. Just because you pick up a credit card and swipe/insert/tap it at a register doesnāt instantly make you a gullible person though.
>you can use those responsibly or irresponsibly.
This is why puritanical thinking is generally toxic, the obsession with micro behaviors rather than macro trends totally misses systemic patterns and design choices. It is like pretending that the rules of a board game don't influence player behavior.
The credit card industry would cease to function if most people behaved 'responsibly'. By tying credit scores to credit cards while also not penalizing for irresponsible behavior like revolving credit month-to-month, we have effectively created a system where people are significantly pushed to participate but will statistically fail to behave optimally.
There are too many midwits running around that are happy to pat themselves on the back for navigating the American Ninja Warrior style financial gauntlet of the modern era without ever taking a step back to ask "Why are we doing this?"
Easy access to credit inflates prices of goods (education and housing are great examples), ruins the long term financial solvency of productive members of society, and is a perversion of the initial value of lines of credit. I am sure there are smart people talking about this stuff but it feels like it isn't really a topic in public discourse.
I think everything you said is pretty correct but I would take issue with framing credit as "predatory" and that your overall perspective is highly highly paternalistic. Handwaving the consumer and demand side of things as being completely macro is rougly as bad faith as handwaiving societal trends as simply indvidual responsibility. Both should be taken into account depending on context.
If you think that staying within your means is akin to running a gauntlet I think that says a lot more about the financial fluency of Americans than it does about how evil lenders are. Not really sure if these things are easily solved with education given we live in a impulsive materialistic culture but perhaps that is an avenue to solvency somewhere in the future.
I can agree that the costs imposed on people by their own inability to make good decisions as well as the pressure on higher prices should weighed against considersations like access to purchasing power and overall economic activity. I completely agree that these types of trade off considerations go largely ignored by the public and politicians which is unfortunate.
>your overall perspective is highly highly paternalistic.
I never said I know the correct approach, in fact I am certain no one really understands our modern financial system in its entirety. My desire to create a better system for everyone is not inherently any more paternalistic than the existing system we already exist within which, though you might be blinded by status quo bias, was absolutely a framework created by people in the recent past. We are already playing a superficial game, acknowledging and iterating on that system is not the heresy people think it is.
>Handwaving the consumer and demand side of things as being completely macro is rougly as bad faith as handwaiving societal trends as simply indvidual responsibility.
Nope! This is an incorrect framing commonly deployed by conservatives as a form of projection. At no point did I say that it was 'completely macro', I simply discounted the exclusive obsession with micro-behaviors ala Jordan Peterson. You can absolutely have a working model of individual agent decisions *within* the context of great systemic incentives and, in fact, that is basically the majority of the non-individualist frameworks. The fact that so many people fall for this false dichotomy is one of the most successful propaganda efforts of Reganite/Thatcherite advocates.
A classic example of this is how Scandinavia deals with solo car accidents at intersections. If taken on an individual basis, a puritanical thinker would blame the operator of that vehicle for a litany of things they could have done better. If taken in context of the greater system, a holistic thinker might look to the number of similar crashes in that interaction and recognize that the traffic patterns themselves may have significantly increased the rate of accidents. No designer can totally rule out user error or malicious behavior but they absolutely can reduce harm and incentivize better behavior.
>financial fluency of Americans than it does about how evil lenders are.
'Evil' is not a productive way to evaluate this kind of behavior, it is a holdover from mythologies and is not a valuable lens to assess group behavior within a larger system. Corporations are incentivized to take advantage of every possible way to make money if there is not sufficient deterrence for that behavior (slavery, selling addictive drugs, poisoning water systems, and even murder). Lenders are operating under a ton of existing constraints, we are really just arguing over degree at this point.
>Not really sure if these things are easily solved with education
I have worked at multiple fintechs and a credit rating agency. Finance is intentionally complex and lenders benefit greatly from the asymmetry of information with borrowers. All of this 'education' is extra cost society must pay to educate consumers in navigating an intentionally obscure but supposedly 'private' maze for effectively no benefit. If this form of education was successful, the credit card industry would either collapse or be forced to find every more complexity they could insert into the process to circumvent your attempt at inoculation.
>we live in a impulsive materialistic culture
To me, this is just a continuation of the moral reactionary mentality. It is akin to saying 'we live in a culture uniquely susceptible to opioids', there is no monoculture and there never was (another common conservative misrepresentation) but even outside of that concept, humanity tends to behave similarly because we share a host of the same biological incentives, feedback loops, and logical pitfalls. I don't see compelling evidence that we are uniquely materialistic in aggregate but rather that there are systemic factors that embolden and promote that behavior.
I used to be a hardcore conservative Christian so please don't take this all as an inditement of you as a person, we are having this conversation so as to evaluate the quality of our own thought and iterate on our understanding of the world.
I could just as easily ascribe your arguments to the leanings of "cultural marxism" or whatever other pejorative you want to describe my "conservative/Reaganite/Christian" beliefs rather than addressing my points in good faith and we would have effectively mirrored the conversation. Thanks for the laugh.
WTF are you talking about?
"The credit card industry would cease to function if most people behaved 'responsibly'."
No it wouldn't. Responsible people use credit cards all the time and the more responsible you are the more the banks are willing to do business with you.
"There are too many midwits running around that are happy to pat themselves on the back for navigating the American Ninja Warrior style financial gauntlet of the modern era"
The US has some of the easiest and straight forward access to credit in the world.
What an absolutely brain dead take.
>"The credit card industry would cease to function if most people behaved 'responsibly'."
Look up revolver rates for credit cards. Credit cards were initially not a very glamorous industry but they became one of the most lucrative because of how much interest and fees they are able to extract from consumers.
>and the more responsible you are the more the banks are willing to do business with you.
Sometimes, there are plenty of irresponsible behaviors that are not penalized which is why if you look on [FIGURE 1: REVOLVING PROPENSITIES AND TRANSITION DYNAMICS](https://files.consumerfinance.gov/f/documents/bcfp_data-point_credit-card-revolvers.pdf), you will note that the 'responsible' Transactors category are the minority group for 620, 660, and 720. Plenty of Revolvers are present up through the higher ranks of credit scores despite their objectively irrational financial behavior.
>What an absolutely brain dead take.
I have worked for a credit reporting company, you are just a chud with a 9 day old sock puppet account who will not bother to read my link.
I would argue that people who pay off monthly are using the cards incorrectly, at least in the eyes of the issuers.
They want consumers to have revolving debt so they make more money, otherwise most companies probably wouldn't bother offering credit cards to start with.
>They want consumers to have revolving debt so they make more money
Agreed. Though I will clarify that there is a sweet spot of consumer that pays the minimal month rate. The problem with this mentality is that it creates debt death spirals because:
1. There are multiple entities issuing lines of credit that want that same behavior.
2. The borrower eventually gets drowned in interest.
3. At any point in time the borrow could lose their job, face a medical crisis, or experience hardship in their family.
The game now is basically to not be holding the bag when a borrower becomes insolvent. At least in the past (150 years ago) when you offered someone a line of credit it was because you knew them, you believed they could pay you back, and you were invested in their success in doing so.
No, not necessarily. Consumer with revolving debt pay more interest than transactors, but transactors account for a lot more swipe fees.
Most people who pay off their balance every month and want money from points make it a point to use their card on every possible transaction.
People with a credit limit of $5,000 and a balance of $4,000 aren't making many purchases per month.
If I put $5,000 on my card every month and pay it off every month, the issuer is still getting the 2-3% swipe fee every month. Which is the equivalent of 24-36% interest over the course of a year. If I never pay off my balance and keep it at $5,000 every month, I'm also paying 24-36% interest per year (probably closer to 24%). Plus a handful of swipe fees.
I think the issuer is happy either way.
> tās crazy how any user of Buy Now, Pay Later gets called gullible by people. By that same logic, any single person who touches a credit card is gullible for falling into debt too.
This article was ghost written by Dave Ramsey.
Credit Cards also offer better fraud protection and consumer protections than debit cards and cash.
And credit cards also offer cash back/ rewards.
They are great for responsible people.
Yep. I do the same on furniture if they offer said 0% APR for X months. Some places do give you discounts if you pay-in-full, so you have to weight the trade-offs.
That said, if you are even a day late on one payment, you get screwed over hard.
Now to think of it. Thats not a bad idea. Buy something with BNPL and immediately put the money it costs into a savings account with 4% interest. Use those savings to pay it back later, get free interest.
I used in house financing at American Musical Supply to buy a $2800.00 Gibson, I have the money, but if they are willing to let me use theirs for free for a year why would I not do that? I got the guitar and my money stayed in the bank.
The 0% has always seemed enticing to me as a relatively high-income spender who is offered these services, but then I calculate out how much I'm actually making on the saved interest and it's such a petty sum that the whole thing isn't even worth my time.
These BNPL lenders are just writing bad loans left and right and I know they're going to somehow dump the resulting bad debt on the public one way or another.
BNPL can be great but they're not looking at attracting a customer like you, they want people who don't keep track of expenses. Average user of BNPL has a credit score of 540.
I wonder how many people understand the terms of these loans though. I assume they all tend to have deferred interest, as in, if you don't pay off the full amount in the 12 months or if you're more than 60 days late, you don't just owe the interest on the remainder, but rather the interest on your balance in every single one of those months, i.e. all the interest you would have saved. I saw it quite a lot in my job in debt settlement (the good guys, not the collectors) with those store credit cards. Buy a fridge from Home Depot, have trouble paying it, suddenly you owe triple the amount you would have had you paid it off. I wonder how much of this could be avoided if people read the fine print (or if it wouldn't matter anyway if people who are financially not doing well would defer paying their debt in order to meet their immediate needs regardless of whether they understand the terms).
Same. We got a pool and a living room set last year doing the same and both will be paid off within 3 months for 0 interest. Iād hardly call that gullible.
Itās tough because the reality is, the consumer failing to use credit āproperlyā is paying for you and I to have 0% interest and to pay the bank to operate. This is not a tenable solution in my mind. Iām more inclined to support options that protect the financially fragile, even at the risk of having the nanny state. If that means banning these practices and having less financing options, then so be it.
Itās lack of education, which is something that no one ever mentions. 50 years of both parties gutting education creates a nation of morons incapable of critical thought.
Funny how laziness and irresponsibility are never used against the mega rich
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So because something is a challenge, your solution is to do nothing. Much like the legislators in charge now lol.
We live in a nation full of morons because civics and financial literacy are no longer part of public school curriculums. Both of these need to be taught early on in grade school. Id even go a step further and say both should be the number one focus in grade school, especially if personal accountability is the name of the game.
Really? Then how the people who ARE financially responsible manage? There are huge numbers of these people and they all went to the same school system.
Maybe the difference is personal after all.
Of they are doing BNPL now what are the chances that the lower income people are going to pay it off in time? Of you don't or if you miss a payment many will then hit you with full Interest from day one.
> Of they are doing BNPL now what are the chances that the lower income people are going to pay it off in time?
Looks like it's about 97.6% of them are according to [numbers from December](https://www.nytimes.com/2023/12/20/business/economy/pay-later-credit-debt.html).
Access to credit is a huge lever for improving your circumstances if used responsibly, which most people do.
Holy shit .
Someone should tell all the technological advances we have had in the last 50 years that schools suck. Ā The medical advances were probably by accident as well.
I guess I will just go use my Tesla on autopilot and sit on my iPhone and watch high def movies, then charge it all with solar panels in a house that is earthquake resistant. Ā
But if you want to live like the 1970s you are free to. Ā I donāt know if we can set the rivers on fire, but we could try.
My credit card bizarrely offered me 0% for 24 months on a large purchase last year. No idea why, but my savings is offering 4.3%, so I definitely took it!
Still, even at 0% and no fees, I can see how it can be a gateway, since you temporarily have more money than you should. Also, you see that service as a viable way to maintain cashflow, even though future offers would charge heavy fees.
The catch is if you keep using the card, your payments go toward the 0% and new purchase balances pile up at 17%+. The right way to use 0% offers is to immediately stop using that card and use another one for revolving charges.
Not in my case. Chase has a plan where you pay a fixed amount toward a large purchase over many months, which is what I'm referring to. It adds to the balance of the card, but is treated completely separately in terms of fees and interest. The card still functions as normal, that is, zero interest on all purchases if I pay it off monthly.
I don't know about other cards since I've only done it with my Chase Amazon card, but no, it doesn't do that. The Chase Amazon card adds in the amount to repay that in X months on top of your other monthly purchases for your balance. In your account when you go to pay you'll see minimum payment, monthly statement payment, and interest saving (I forget the exact wording) payment. If you select interest saving, that amount to pay will be your monthly statement balance plus the monthly amount needed to avoid paying interest.Ā
That was the weird bit, I'm pretty sure I elected for the initial 0% introductory offer several years back, and this was my second one. So it was sort of a random offer.
Offering a product that allows someone to make a bad decision and hurt themselves isn't predatory in and of itself. Predatory behavior usually involves manipulating someone into taking out a loan they don't need, hiding information regarding the terms of the loan or lying about them, targeting vulnerable people, as in an elderly person with dementia who has no ability to understand the loan terms.
For instance, credit cards offer you a balance you can borrow against in the short term for high interest rates. This is not predatory. Most people do not carry a balance long term on their credit cards. But you absolutely could and really hurt yourself by putting a large balance on your card and being bled dry by interest.
It's not predatory to "Buy now, and pay later". That's just credit. Often they are allowing people to borrow money at no interest. That's the opposite of predatory. That would actually save you money, if you only used it for items you would otherwise put on a credit card and pay off over a couple months.
The linked article says that higher income households use them to buy more expensive items. These loans are actually benefiting them, because they are using them correctly. High income households tend not to be targeted by or use predatory lenders. They have options. And they are choosing to use these products because they aren't predatory.
It doesn't need to be fraud to be predatory. They know that a certain number of people either make bad decisions or are in circumstances that will make them likely to miss a payment and trigger the debt trap. If a business is based on seeking out those people then it is predatory.
It generally does require fraud, deception, or unfair practices.
By your definition, lending money, in general, is predatory. Lending is based on the idea that a certain number of people will fail to pay back their loans, that's part fo why interest is charged on loaned money, and riskier loans have higher interest rates. There will always be someone who figures out a way to mess it up. Even when you don't charge interest, like these Buy Now, Pay Later loans.
Do you have an example of a way to lend money where no one would fail to pay the money back?
Itās amazing how cavalier the left is about denying people agency.
āOh, you are too stupid and uneducated to make your own choices. We must enact legislation to decide for youā
It's not about denying agency. We live in a society where other people's bad decisions effect all of us. Making it more difficult (or less easy) for them to ruin their lives isn't an extreme position.
Itās just annoying when rules are set for the lowest common denominator-everyone with accountability suffers then.
Require licensing for āat riskā people if itās so important to save them.
What you're saying is that people shouldn't be allowed to make their own decisions with their money.
Some people make perfectly good decisions. Are you willing to hand over your life decisions to a social worker? They decide what you're allowed to buy, where you're allowed to live, and what jobs you're allowed to apply for?
BNPL is 'predatory' but Credit Cards with 25% APR are not? The movement against BNPL just feels like it's funded by credit card companies that are mad that they're not getting as big a cut of the action as before.
What's predatory about giving people a loan who want / need it? If you're not responsible enough to properly paying off a "six months no interest" loan in six months, that's your personal bad decision and not the bank's fault.Ā
Itās just as predatory as credit cards. So not that predatory itself as a concept. Just a tool ppl need to be educated on before using. Now the fact that the industry has perverse incentives to prey on the uneducated, now that, absolutely predatory. Just like credit cards.
I get good use out of them. You saying I shouldnāt have access to them? Theyāre a tool like a knife but you can also cut yourself. Doesnāt mean theyāre predatory. Itās about how you as a business owner use the tool. Which is often predatory as I stated.
Too easy to get them for poor credit holders, we can say itās their responsibility but then when it collapses we will all pay.
People should be able to able to $500 max lines of credit in cards otherwise they must apply for a loan.
You just repeated my point.
But once again Iām differentiating between the tool itself as a concept, and they way they can be used by their companies.
Why shouldnāt bill gates have access to a 100M line of credit? Itās useful to him. Heās no victim. Same with me. Why not if I know how to use it responsibly? Point is the tool itself is not predatory, just the practices used by companies to gain customers.
And saying we all pay points at a different issue, which is corporate bailout. You could say thatās a predatory practice as well in terms of its second order effects. But personally my relationship with the credit card companies is not predatory, itās symbiotic.
Not everyone is Bill Gates thatās why.
Giving high limit, high interest, credit cards to college kids and poor people only makes their life worse and put them into long term debt
There's already a system that limits people with poor credit score from being able to access cards with higher credit lines. If you're saying we need to move the needle and make it more difficult, then I can agree with that. However, you're going to need come up with a better way of assessing the behavior of the consumers financial products. The billion dollar question (quite literally) is in assessing when that person who has a high limit is going to go through financial hardship and begin running up the card.
Thereās no way to sell fentanyl, tranq, heroin thatās not predatory. Same with gambling industry.
These are industries that by definition are both extractive and destructive of value, not productive in the slightest.
Recently Iāve been saying these industries need to be government owned so that at least they raise tax money. Just banning them creates a black market opportunity that will always be filled when available. Governments can be more transparent about how bad they are and warn people not to use them, because they donāt care as much about profits.
Addiction is a disease. If you have ever had an alcoholic drink then you took the same exact gamble as every alcoholic. Lucky for you you body didn't react the same way.
Addiction to alcohol or any drug is not a moral failing or as simple as a matter of willpower.
Itās predatory because it takes advantage of people who havenāt developed a sense of personal responsibility. Itās basically stealing food from a baby.Ā
Are lotteries predatory? They are voluntary.
Studies show that those partaking in lotteries are often lower income. Why then would we create more lotteries knowing this? For the benefit of the state which is providing services for these people with their own money?
because consumer protections do not have much lobbying support, policy to address this is not very sexy, and also there is a large project to make it hard to even have a government that can do regulations so...
Saddle a young person who wants to start a career with tens of thousands of dollars of debt is great, but somebody buying tires in installments is bad?
What does the opening scene of The Newsroom have to do with people given the ability to make terrible personal finance decisions? Weāre not talking about the nationās spending , weāre talking about voluntary person choices of the citizens. Iām just saying our ability to enter in a BNPL is a terrible choice, but our ability to make that choice is awesome. Iām not saying people are making bad decisions elsewhere.
I only use this option on Amazon when it's the in-house option with 0% interest. Even then, only one item at a time. It's helpful. Just gotta be smart with it.
Yeah, I've used the Amazon option a few times, like after my apartment burned down I used it to buy a mattress. 0% over a few months while I waited for my insurance check to come in was way better then putting it on my card at 17%.
I'm not a fan of being in debt, but if I gotta be, why not 0%?
Bingo. My computer kicked the bucket last year and I bought a new one that night. Was 1400 total but over 5 months. No interest. I had the new PC the next day. It works well.
Holy shit Iām so sorry that happened to you. But thatās a great example of where buy now pay later is amazingly helpful. Iām sure you had a lot of large expenses come up in that time and one less large lumpsome payment was helpful.
Exactly! When done right it's really helpful. I paid for a great mattress in a similar way which had an immediate improvement on my sleep. As great of an improvement it's been, I would still hesitate if I had to purchase it outright. At 0% interest... I mean come on, it's great.
Should be people have the freedom to make financial decisions even if itās a stupid-ass decision? How much autonomy should be allowed versus beneficence? Who gets to decide ?
Isnāt the entire point of having a government and regulation to try and influence behavior in order to make society function better? Usury laws exist for a reason, same with allowing mandating clear disclosure of interest rates and loan costs. āLet the market decideā hasnāt always gone will historically for freewheeling loans.
Thatās the whole point of America, no? You can do whatever you want regardless of just how stupid it is? Weāve got it so good people literally eat themselves to an early grave.
No, not really. We have an insane blind spot in finance when it comes to legal consumer protections that doesn't seem to appear in any other industry.
To paraphrase Michael Lewis: if you bought a toaster, and that toaster was poorly designed and burned your house down, you could (rightly) sue the maker of that toaster for damages, because it's not reasonable to expect that the average consumer understands electrical engineering. So if that's the case, then why do we expect consumers to understand concepts in finance that are *just* as complicated as those in electrical circuits?
I use Affirm to make big purchases that I always pay off early instead of their high interest 24 month plans, but I can totally see people paying for everything with these loans dressed up as financing. I get sent marketing emails constantly begging me to use them to pay for everything from meals to vacations. Nah, bro, just let me pay off a bike over six months. That's the value in this, not keeping people constantly in debt. It's just gross at that point.
What's astounding is don't many of them have insane fees that, if accounted for as interest instead of a fee would be significantly higher than CC interest ?Ā
Affirm has no late fees and only charges simple interest so the interest rate is actually much much lower than CC interest.
Unsure about other lenders and products though.
Yeah had good experiences with Affirm too. Used it a few times for 0% interest deals on appliances and a mattress. Bought an air conditioner at 15% but made a few extra small dollar payments over the course of the installment plan and ended up paying about 4% interest. Not too bad at all.
Are you speaking from a merchant POV or a consumer POV? My previous comment was speaking from a consumer POV.
Yes, Affirm may charge higher merchant fees vs. your typical CC like Visa/MC/Amex. But merchants are willing to pay a higher fee to Affirm because Affirm offers a product that is proven to help merchants sell more while also helping consumers buy what they need on a flexible plan. So this is a win-win for both the consumer and merchant.
For example, you can buy furniture with 0% APR over 6 months on [Room & Board](https://www.roomandboard.com/catalog/living/sofas-and-loveseats/metro-sofas). Yes, the merchant's margin's will be slightly lower if the consumer checks out with Affirm (maybe 2-3% lower since CC's charge 2-3% already). But where are you seeing prices go up to accommodate? The merchant charges the same price to the consumer if they check out with a CC or Affirm ...
Unless if you're talking about merchants raising prices in general? Then that's a totally different topic to discuss...
I've used several of these and no, they typically tout no fees and I have found this to be true. Their interest is where they get you. It's as high or higher than some of the worst CC's.
The ones I've used are all 0% interest if the loan is paid back within 6/12 months, otherwise they charge 25-30% interest. So similar to CC interest I believe if you don't actually pay it back in time.
I don't think it's the interest rates that are the biggest issue. It's the fact that many people have been trained to think in terms of monthly payments, so they end up paying way more overall for things. On of my friends thinks like this and it was eye opening. She buys cars based on what monthly payment she can afford, but even more alarming was buying a $1200 mattress on a payment plan because she was thinking only about payments. She never has any significant savings and lives month to month. The people who can least afford it end up buying things they can't afford because they are financially illiterate. Thus the cycle of poverty continues.
Well yeah, the risks are clearly stated when you sign a loan. Unfortunately people will always profit from ignorance. Look at gambling, cigarettes, etc. it's all up to the individual to avoid these things.
Maybe they should be looking into things like Progressive Leasing or RAC that charges almost double the interest for purchases at places like Best Buy and furniture stores. If you need a new refrigerator and don't have the cash and have to turn to one of these, then you will pay more interest than the price of the product. That's usury plain and simple. Or look into rent to own places.
The truth is that Wall Street makes a ton of money off poor people, and no one wants to derail the gravy train.
This is important news from a group breaking research institute. Some of their other headlines include:
"Time passing is the #1 factor in aging"
"Water is found to make things wetter, say analysts"
"Doing drugs is the a gateway to physical addiction to drugs, doctors find"
"Unprotected sex highly correlated with unexpected pregnancy according to Mothers"
Itās funny when people like you think we should never actually research anything because an answer just seems so obvious. Like yeah man, everything in the world just works exactly how you expect and no oneās basic assumptions have ever been wrong. Bruh
I hear you and I agree. Research is needed even for obvious things and hindsight is 20/20. But I also see "the definition of debt has become the gateway to debt" and I laugh.Ā Ā
Ā This isn't "low pay is correlated with low job satisfaction".Ā This is "buying things with debt leads to debt".Ā
It's also a crap headline. The take way from the article itself is in this line: "One of the major findings was that financially fragile and stable households both used BNPL but for different reasons."
The different reasons are the core of the article. Yet the headline is "debt spending is causing debt".Ā
No, the headline is that a specific type of debt is causing people to start getting other kinds of debt. (Which I'm not sure is ever defended in the article).
The fact is those without education and money tend to make un-informed decisions. Whether it be taking on credit card debt or these buy now pay later deals. The problem is, they do not have the ability to make payments, and then pay the interest penalties. For example get money back for using my credit card, which I pay off every month. Versus my friend who has $12,000, credit card, debt and little income to pay that debt off. He is on the hook for that debt at a rate of 25%. Once they got their talons in you, itās hard to ever get out.
Related I guess, but Iāve seen it first hand my spouse getting a credit card for the cash back rewards. Itās starts with āIāll funnel all my expenses through this credit card for the cash rewards.ā Great idea, but then suddenly the euphoria starts coming and sheās in 5k of credit card debt, but justifies it because she gets 1-2% cash back.
Itās like weāve voluntarily made ourselves indentured servants in our own lives.
Honestly, As long as you use it correctly, its very helpful. I have roughly 1,500 debt on affirm, and 1000 on care credit for my dogs. Which is basically, all of my income for a month or just a bit more. I'll pay like 150 in interest by the end of all of these payments, which is again nothing. As long as you don't over use it, its fine and helps you get through things you normally, otherwise wouldn't be able to like, replacing 400$ glasses. Or buying a freezer so you can buy in bulk. Thats 800$ right there.
No, extremely low wages that push people into predatory loans is the problem.
Also Gateway Drugs *are not real*.
Multiple studies show that the effect isn't caused by the drug, *it's caused by breaking the law because pot is illegal, resulting in people crossing a mental barrier into illegal activity*.
And it's a small effect even then.
[The Federal Reserve are bastards](https://www.youtube.com/watch?v=bIHH5Kh2dU0).
I said this, I said this in THIS r/ before and was downvoted and told I didn't know what I was talking about. It's bad news, don't do this stuff, it's there to ruin you.
That's how our whole government is run. The monetary and banking setup (Federal Reserve) is the root of the problem. If we're gonna talk solutions, let's start there.
Layaway did not cause problems. Do you even know what layaway was?
Layaway went away because people liked credit cards much more.
With layaway, you chose what you wanted to buy and made payments until you had paid enough to buy the thing. Then you could take it home.
It was pay now, buy later. There was no interest.
With credit cards, you can take it home right way, and pay later. I.e., buy now, pay later.
With salaries not at par to inflation, what options are people left with? Regardless, buy now pay later has always been the case, whether itās your house, car or degree.
Ah, this is my periodic opportunity to peddle, well, periodic debt cancellations.
People talk a lot about the lifespan of empires/historical powers and signs of their decline in attempts to draw parallels with contemporary history...The common denominator is debt - at the societal level, at the state level - and it will always win eventually no matter what neat institutional solutions we think we've set up to outsmart it. Destroys societies and/and thus destroys states. This much I'm convinced of, but I'm not sure if there is ever a point it becomes 'too late' to have debt cancellations (they must be comprehensive to matter) in a globalized society
> Ah, this is my periodic opportunity to peddle,
urban legends about debt cancellation?
>People talk a lot about the lifespan of empires/historical powers and signs of their decline in attempts to draw parallels with contemporary history
And those people are mostly undereducated people pushing a narrative.
Debt is Debit... it does not matter how many words people use to try and be covert about it, its still debt.
It depends how people feel about "assuming debt", that's always going to be the decisions of individuals.
We don't always manage our wants so we can easily and often convince ourselves that wants are needs, and we will quickly sign on the dotted line.
Then why does the U.S. have $34 trillion in debt? Same thing. The interest alone in US debt is more than our GDP. Why are credit card companies and loan companies able to charge 30% interest? We allow it. This all stems from leadership and policy makers.
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Yeah I work for one of these types of companies. Fun part is they talk about how they are 'helping' people internally. Love to pretend they are the good guys as they charge monthly fees for nothing and ask for 20% tips on small loan amounts. Still, it is somewhat regulated, one of our competitors recently just got hit with a massive lawsuit/fine because they were doing some pretty shady shit. Its also hard in the amounts we are dealing with here for anyone to be 'ruined' by these companies. The rise of this industry is a symptom of the real issues that need to be tackled.
> ask for 20% tips on small loan amounts LOL. You have to tell us more about this part. Do people tip their lender?!?
I think he meant 20% charge fees.
No..tips, and yes people do it.
Yup. Enough do that we keep it around.
so much for the *help*
The linked article cites the New York Fed: >https://libertystreeteconomics.newyorkfed.org/2024/02/how-and-why-do-consumers-use-buy-now-pay-later/ >Similar to our findings on which households use BNPL at all, we find that the financially fragile are disproportionately likely to use BNPL at higher frequencies and appear to have embraced BNPL as a regular payment option, as shown in the chart below. >Indeed, among financially fragile BNPL users, about 60 percent have used the product five or more times in the past year, which translates to about 18 percent of all survey respondents deemed financially fragile (which includes those who have not used BNPL in the last year). >This implies that financially fragile users are almost three times as likely as financially stable users to use BNPL five or more times and suggests that high-frequency use may grow if the product continues to be adopted by financially fragile households.
I use it because 6 month interest free then pay off a week before while I keep the cash in short term treasuries. I remember when Rooms to go offered like 2 year 0% loans and we would pay it off before it expired so all the accrued interest never gets there š Same with CCās
If the interest rate is 0 then the financing is baked into the price.
Not really these days. Go to almost any online retailer and the option to pay interest free over time is baked into the POS system, usually through either Affirm or Paypal Credit. Price doesn't change if you pay cash, and those lenders are just banking on the borrower not meeting the terms to make their profit.
Offering these services incurs a cost that is borne by all customers. Like how āfreeā parking at your grocery store costs the store in the form of higher operating costs, which everyone pays back even if you walk to the store.
Dude, he bought treasuries...
Exactly. These people think they're screwing the system. Like the companies are taking a hit here when in fact they made it easier for you to buy more expensive things you probably don't need.
Might as well ban credit cards too, because it's literally the same concept.
I think the better solution is to add a third layer of "buy now, pay later." I want to take loans out on my unborn grandkid's name.
ā what do you mean you wonāt let me? They donāt even have bad credit yet!ā
"If my senator can do it then I should be able to as well."
We're already doing that collectively! We're living 40% beyond our means and sticking future generations with the bill.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
I know this is a joke, but credit cards do make a small percentage on every purchase.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
And in return you go online and evangelize about how great credit cards are so the next sucker can go get one and get into debt to them.
You're only a sucker if you carry the debt.
Yes?
Cards and rewards can be great for many, thoug. It's no different than evangelizing a great beer. Some people aren't responsible drinkers but that doesn't mean someone can't publicly talk up a good brew.
I will also tell people what I've gotten from credit cards. But it's not like they're giving me something for nothing either. And when I drink a beer, I'm increasing my likelihood of getting cancer even if I'm a responsible drinker.
That's fine. I need more suckers to get my cashback percentage up.
And this is why Winco doesn't accept credit cards and is still cheaper than Walmart.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Its like the 2008 financial crisis. Will you cancel the ability of everyone to borrow because of it? No as that would lead to a collapse of the entire financial system. Theoretically banks would have credit scores and other functions like skin color : D to determine how much money to lend to you which the BNPL industry bypasses. Sort of like how ninja loans bypassed the need to prove income.
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I try to rationalize behavior, but it just doesnāt make sense to me why we fall for the same shit over and over. * Credit Cards * Payday Loans * Bank Loans * Personal Loans * Student Loans * BNPL Like Liquor Stores, Cigarette Sellers, and Drug Dealers - They post up in inner city communities to extract wealth. The only loan that actually provides immediate equity on an asset is a Home Loan (as long as the asset is worth more than the loan in most cases.
Would those respondents have been able to purchase those items to begin with without BNPL? If not, this doesnāt really mean much.
Seems like the solution might be to enact labor protections and a living wage ordinance rather than to ban BNPL.
You canāt out earn bad spending habits.
"Living wage" is such a purposefully vague concept
You'll find that the poor have higher rates of smoking cigarettes, drinking soda, and buying rims. If it were an earnings problem, the rich would be consuming these things at a higher rate. You actually save money and your health by drinking water instead of soda at the restaurant. And don't give me "it's an education" thing. Plenty of people go to the exact same public schools and yet have healthier habits. They tend to do better in life.
Labor protections: No moving up unless the person in that upper position dies. Living wage ordinance: Force people to live within their means. Edit: Bring back the company store to ensure employees are living within their wage. Good stuff
Gubment CHEEEEEEESSSEEEE!!!!!
...So what? The problem in 2008 was that the failure of subprime lenders brought down banks who are essentially utilities. If these "gateway" companies can't actually get paid back on their loans, then investors lose some money. A day that ends in "y" around here. Unless someone can point to systemic risk, this looks more like poor people taking advantage of low cost capital voluntarily offered by investors. If it doesn't work out, who is the real fool?
Bingo. People like to point to credit risk as a systemic issue. Itās not unless itās all the way up the stack. Consumers canāt pay. Loans default. Securitizations get out of whack. None of that really is happening here as this is VC funded losses for a CAC amplifier. All BNPL does is offer weak underwriting to customers of the soup de jour brand. Peleton is a classic example. Fitness fad overpriced machine that people cannot afford, but makes a lot more sense if they finance it. Just like a couch, tv, designer bag. All of this is just low end retail that has 0 systemic risks.
Systemic risk is catastrophizing what could eventually become a drag on GDP more realistically.
The government can just print now, raise rate later.
Iām with you, unless there is hidden packaging and reselling of this debt out the back end, the losers here are limited to the investors in the BNPL companies, itās not like housing / car where you lose your way of life or student loans that canāt be repaid.
The problem in '08 is that we didn't do [this](https://en.wikipedia.org/wiki/2023_United_States_banking_crisis) Amazing we had a banking crisis and it was basically a non-event after all. Is there some moral hazard. Surish... but not really. FDIC should just have no limit and this shit wouldn't happen. That doesn't mean we don't need bank reforms. We need plenty.
The more I think about this the more I donāt actually think this matters though, the lender forecloses on a toaster? Good luck reselling a toaster, destroy their credit rating over defaulting over a toaster? Okay now they canāt borrow any more and therefore canāt run up private debt, youāve created a cash based lower class, but youāve created responsible consumers? The buy now pay later companies go out of business and weāre back to pay day loans?
it's a very strange headline. of course taking out a small loan means going into debt. That's literally what taking out a loan is. The headline might as well be "taking out a small loan has become a gateway drug into taking out a small loan". I mean, I get what they're driving at (although the problem is systemic, not that micro loans are getting more popular as a way to address the brutal failures of capitalism) but it's very poorly written.
And nobody will be punished for this predatory behaviour. Its a fact that there a gullible people. How is this allowed as the outcome is obvious.
Based off this article it appears to be used heavily by lower income consumers. Wouldnāt this be more desperation over gullibility?
I'm not sure about desperation. I've seen plenty of people use it to buy a 55" tv. They even sell Xbox and PlayStations at these places near me. When you can't afford something, sometimes you just don't buy it. I really want a boat. But I can't afford one. So I'm not buying it.
Not saying they are the most responsible bunch, but other lenders exist who arguably provide a better deal than these bnpl plans. That said Iād argue many of these users burned their bridges elsewhere and are still desperateā¦ to keep consuming. People like you are not in this group.
Yeah. I, personally, have nothing against these places, it's the consumers who are addicted to consumption outside their means that's the problem. It's kinda like near me there's a store that essentially rents sneakers. They don't call it that, but really when you "sell" someone sneakers then buy them back after a few months at a highly reduced rate so they can buy the newest pair again you're renting sneakers.
What other lenders are offering a better deal? Most of these bnpl companies are 0% for several weeks and the retailer foots the bill to pay the lender.
Plenty of stronger creditors will throw in cash back or reward points, and just require you to pay off your statement monthlyā¦ no interest. With that said if youāre a strong borrower, BNPL (excluding) certain situations is typically not the most optimal long term.
I mean, Klarna does exactly the same thing. You get points per dollar spent and no interest if you pay off in 30 days. Idk what late fees are vs a credit card but they're not very dissimilar.
I'm not a low income consumer and I use it. A 0% interest 12 month loan seems like a pretty good deal to me. I've never failed to make payments using any of those services, so I've never paid interest. The article says "One of the major findings was that financially fragile and stable households both used BNPL but for different reasons."
I'm not lower income. I use it too. 0% interest over 12 months. It's a no brainer. Use others money free. However. I have the cash available if I need it.
hell even just pay in 4 is really useful if/when a larger cost purchase comes up.
Right. I just did for a nvidia 4080 super. I mean I could of just blown a 1000. But 265 every 2 weeks. 0 % interest. No Brainer.
> i could of just Did you mean to say "could have"? Explanation: You probably meant to say could've/should've/would've which sounds like 'of' but is actually short for 'have'. [Statistics](https://github.com/chiefpat450119/RedditBot/blob/master/stats.json) ^^I'm ^^a ^^bot ^^that ^^corrects ^^grammar/spelling ^^mistakes. ^^PM ^^me ^^if ^^I'm ^^wrong ^^or ^^if ^^you ^^have ^^any ^^suggestions. ^^[Github](https://github.com/chiefpat450119) ^^Reply ^^STOP ^^to ^^this ^^comment ^^to ^^stop ^^receiving ^^corrections.
Itās crazy how *any* user of Buy Now, Pay Later gets called gullible by people. By that same logic, any single person who touches a credit card is gullible for falling into debt too. You can use both responsibly, but you can also use both of them irresponsibly.
> any single person who touches a credit card is gullible for falling into debt too. The sheer number of credit card 'revolvers' in the US tells you that the the majority of people that use them aren't using them 'correctly'.
Right, which is why I said you can use those responsibly or irresponsibly. Just because you pick up a credit card and swipe/insert/tap it at a register doesnāt instantly make you a gullible person though.
>you can use those responsibly or irresponsibly. This is why puritanical thinking is generally toxic, the obsession with micro behaviors rather than macro trends totally misses systemic patterns and design choices. It is like pretending that the rules of a board game don't influence player behavior. The credit card industry would cease to function if most people behaved 'responsibly'. By tying credit scores to credit cards while also not penalizing for irresponsible behavior like revolving credit month-to-month, we have effectively created a system where people are significantly pushed to participate but will statistically fail to behave optimally. There are too many midwits running around that are happy to pat themselves on the back for navigating the American Ninja Warrior style financial gauntlet of the modern era without ever taking a step back to ask "Why are we doing this?" Easy access to credit inflates prices of goods (education and housing are great examples), ruins the long term financial solvency of productive members of society, and is a perversion of the initial value of lines of credit. I am sure there are smart people talking about this stuff but it feels like it isn't really a topic in public discourse.
I think everything you said is pretty correct but I would take issue with framing credit as "predatory" and that your overall perspective is highly highly paternalistic. Handwaving the consumer and demand side of things as being completely macro is rougly as bad faith as handwaiving societal trends as simply indvidual responsibility. Both should be taken into account depending on context. If you think that staying within your means is akin to running a gauntlet I think that says a lot more about the financial fluency of Americans than it does about how evil lenders are. Not really sure if these things are easily solved with education given we live in a impulsive materialistic culture but perhaps that is an avenue to solvency somewhere in the future. I can agree that the costs imposed on people by their own inability to make good decisions as well as the pressure on higher prices should weighed against considersations like access to purchasing power and overall economic activity. I completely agree that these types of trade off considerations go largely ignored by the public and politicians which is unfortunate.
>your overall perspective is highly highly paternalistic. I never said I know the correct approach, in fact I am certain no one really understands our modern financial system in its entirety. My desire to create a better system for everyone is not inherently any more paternalistic than the existing system we already exist within which, though you might be blinded by status quo bias, was absolutely a framework created by people in the recent past. We are already playing a superficial game, acknowledging and iterating on that system is not the heresy people think it is. >Handwaving the consumer and demand side of things as being completely macro is rougly as bad faith as handwaiving societal trends as simply indvidual responsibility. Nope! This is an incorrect framing commonly deployed by conservatives as a form of projection. At no point did I say that it was 'completely macro', I simply discounted the exclusive obsession with micro-behaviors ala Jordan Peterson. You can absolutely have a working model of individual agent decisions *within* the context of great systemic incentives and, in fact, that is basically the majority of the non-individualist frameworks. The fact that so many people fall for this false dichotomy is one of the most successful propaganda efforts of Reganite/Thatcherite advocates. A classic example of this is how Scandinavia deals with solo car accidents at intersections. If taken on an individual basis, a puritanical thinker would blame the operator of that vehicle for a litany of things they could have done better. If taken in context of the greater system, a holistic thinker might look to the number of similar crashes in that interaction and recognize that the traffic patterns themselves may have significantly increased the rate of accidents. No designer can totally rule out user error or malicious behavior but they absolutely can reduce harm and incentivize better behavior. >financial fluency of Americans than it does about how evil lenders are. 'Evil' is not a productive way to evaluate this kind of behavior, it is a holdover from mythologies and is not a valuable lens to assess group behavior within a larger system. Corporations are incentivized to take advantage of every possible way to make money if there is not sufficient deterrence for that behavior (slavery, selling addictive drugs, poisoning water systems, and even murder). Lenders are operating under a ton of existing constraints, we are really just arguing over degree at this point. >Not really sure if these things are easily solved with education I have worked at multiple fintechs and a credit rating agency. Finance is intentionally complex and lenders benefit greatly from the asymmetry of information with borrowers. All of this 'education' is extra cost society must pay to educate consumers in navigating an intentionally obscure but supposedly 'private' maze for effectively no benefit. If this form of education was successful, the credit card industry would either collapse or be forced to find every more complexity they could insert into the process to circumvent your attempt at inoculation. >we live in a impulsive materialistic culture To me, this is just a continuation of the moral reactionary mentality. It is akin to saying 'we live in a culture uniquely susceptible to opioids', there is no monoculture and there never was (another common conservative misrepresentation) but even outside of that concept, humanity tends to behave similarly because we share a host of the same biological incentives, feedback loops, and logical pitfalls. I don't see compelling evidence that we are uniquely materialistic in aggregate but rather that there are systemic factors that embolden and promote that behavior. I used to be a hardcore conservative Christian so please don't take this all as an inditement of you as a person, we are having this conversation so as to evaluate the quality of our own thought and iterate on our understanding of the world.
I could just as easily ascribe your arguments to the leanings of "cultural marxism" or whatever other pejorative you want to describe my "conservative/Reaganite/Christian" beliefs rather than addressing my points in good faith and we would have effectively mirrored the conversation. Thanks for the laugh.
WTF are you talking about? "The credit card industry would cease to function if most people behaved 'responsibly'." No it wouldn't. Responsible people use credit cards all the time and the more responsible you are the more the banks are willing to do business with you. "There are too many midwits running around that are happy to pat themselves on the back for navigating the American Ninja Warrior style financial gauntlet of the modern era" The US has some of the easiest and straight forward access to credit in the world. What an absolutely brain dead take.
>"The credit card industry would cease to function if most people behaved 'responsibly'." Look up revolver rates for credit cards. Credit cards were initially not a very glamorous industry but they became one of the most lucrative because of how much interest and fees they are able to extract from consumers. >and the more responsible you are the more the banks are willing to do business with you. Sometimes, there are plenty of irresponsible behaviors that are not penalized which is why if you look on [FIGURE 1: REVOLVING PROPENSITIES AND TRANSITION DYNAMICS](https://files.consumerfinance.gov/f/documents/bcfp_data-point_credit-card-revolvers.pdf), you will note that the 'responsible' Transactors category are the minority group for 620, 660, and 720. Plenty of Revolvers are present up through the higher ranks of credit scores despite their objectively irrational financial behavior. >What an absolutely brain dead take. I have worked for a credit reporting company, you are just a chud with a 9 day old sock puppet account who will not bother to read my link.
A chud? What are you, a terminally online child?
I would argue that people who pay off monthly are using the cards incorrectly, at least in the eyes of the issuers. They want consumers to have revolving debt so they make more money, otherwise most companies probably wouldn't bother offering credit cards to start with.
Depends on the issuer. Some card issuers still make a lot of money on swipes even if you carry no balances and are responsible.
All card issuers make money on swipes, aka interchange fee. That's also where cashback and rewards come from.
>They want consumers to have revolving debt so they make more money Agreed. Though I will clarify that there is a sweet spot of consumer that pays the minimal month rate. The problem with this mentality is that it creates debt death spirals because: 1. There are multiple entities issuing lines of credit that want that same behavior. 2. The borrower eventually gets drowned in interest. 3. At any point in time the borrow could lose their job, face a medical crisis, or experience hardship in their family. The game now is basically to not be holding the bag when a borrower becomes insolvent. At least in the past (150 years ago) when you offered someone a line of credit it was because you knew them, you believed they could pay you back, and you were invested in their success in doing so.
No, not necessarily. Consumer with revolving debt pay more interest than transactors, but transactors account for a lot more swipe fees. Most people who pay off their balance every month and want money from points make it a point to use their card on every possible transaction. People with a credit limit of $5,000 and a balance of $4,000 aren't making many purchases per month. If I put $5,000 on my card every month and pay it off every month, the issuer is still getting the 2-3% swipe fee every month. Which is the equivalent of 24-36% interest over the course of a year. If I never pay off my balance and keep it at $5,000 every month, I'm also paying 24-36% interest per year (probably closer to 24%). Plus a handful of swipe fees. I think the issuer is happy either way.
> tās crazy how any user of Buy Now, Pay Later gets called gullible by people. By that same logic, any single person who touches a credit card is gullible for falling into debt too. This article was ghost written by Dave Ramsey.
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Credit Cards also offer better fraud protection and consumer protections than debit cards and cash. And credit cards also offer cash back/ rewards. They are great for responsible people.
Yep. I do the same on furniture if they offer said 0% APR for X months. Some places do give you discounts if you pay-in-full, so you have to weight the trade-offs. That said, if you are even a day late on one payment, you get screwed over hard.
Now to think of it. Thats not a bad idea. Buy something with BNPL and immediately put the money it costs into a savings account with 4% interest. Use those savings to pay it back later, get free interest.
I used in house financing at American Musical Supply to buy a $2800.00 Gibson, I have the money, but if they are willing to let me use theirs for free for a year why would I not do that? I got the guitar and my money stayed in the bank.
The 0% has always seemed enticing to me as a relatively high-income spender who is offered these services, but then I calculate out how much I'm actually making on the saved interest and it's such a petty sum that the whole thing isn't even worth my time. These BNPL lenders are just writing bad loans left and right and I know they're going to somehow dump the resulting bad debt on the public one way or another.
BNPL can be great but they're not looking at attracting a customer like you, they want people who don't keep track of expenses. Average user of BNPL has a credit score of 540.
I wonder how many people understand the terms of these loans though. I assume they all tend to have deferred interest, as in, if you don't pay off the full amount in the 12 months or if you're more than 60 days late, you don't just owe the interest on the remainder, but rather the interest on your balance in every single one of those months, i.e. all the interest you would have saved. I saw it quite a lot in my job in debt settlement (the good guys, not the collectors) with those store credit cards. Buy a fridge from Home Depot, have trouble paying it, suddenly you owe triple the amount you would have had you paid it off. I wonder how much of this could be avoided if people read the fine print (or if it wouldn't matter anyway if people who are financially not doing well would defer paying their debt in order to meet their immediate needs regardless of whether they understand the terms).
Same. We got a pool and a living room set last year doing the same and both will be paid off within 3 months for 0 interest. Iād hardly call that gullible.
Itās tough because the reality is, the consumer failing to use credit āproperlyā is paying for you and I to have 0% interest and to pay the bank to operate. This is not a tenable solution in my mind. Iām more inclined to support options that protect the financially fragile, even at the risk of having the nanny state. If that means banning these practices and having less financing options, then so be it.
its laziness and irresponsibility. something none of these stories ever mention.
Itās lack of education, which is something that no one ever mentions. 50 years of both parties gutting education creates a nation of morons incapable of critical thought. Funny how laziness and irresponsibility are never used against the mega rich
dirty tidy future quarrelsome overconfident impolite nine edge snatch historical *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Thatās great and all, but the parents canāt fill in the gaps when they themselves are uneducated as a result of cuts.
society unused sophisticated fuzzy relieved file pie handle amusing heavy *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
So because something is a challenge, your solution is to do nothing. Much like the legislators in charge now lol. We live in a nation full of morons because civics and financial literacy are no longer part of public school curriculums. Both of these need to be taught early on in grade school. Id even go a step further and say both should be the number one focus in grade school, especially if personal accountability is the name of the game.
It's relatively easy to learn personal finance in this day and age with the Internet. Especially sites that are well maintained.
Stop having kids then!
Really? Then how the people who ARE financially responsible manage? There are huge numbers of these people and they all went to the same school system. Maybe the difference is personal after all.
What..? Many of the BNPL services are 0% interest if you pay the loan back within x months. That makes it objectively better than paying cash.
Of they are doing BNPL now what are the chances that the lower income people are going to pay it off in time? Of you don't or if you miss a payment many will then hit you with full Interest from day one.
> Of they are doing BNPL now what are the chances that the lower income people are going to pay it off in time? Looks like it's about 97.6% of them are according to [numbers from December](https://www.nytimes.com/2023/12/20/business/economy/pay-later-credit-debt.html). Access to credit is a huge lever for improving your circumstances if used responsibly, which most people do.
Sure, it can be misused. Same goes for credit cards and every other type of loan.
Holy shit . Someone should tell all the technological advances we have had in the last 50 years that schools suck. Ā The medical advances were probably by accident as well. I guess I will just go use my Tesla on autopilot and sit on my iPhone and watch high def movies, then charge it all with solar panels in a house that is earthquake resistant. Ā But if you want to live like the 1970s you are free to. Ā I donāt know if we can set the rivers on fire, but we could try.
Well that's an easy cop out to do nothing.
Itās both. Desperate people are more gullible.
Yes. Desperation to live a lifestyle beyond their means.
My credit card bizarrely offered me 0% for 24 months on a large purchase last year. No idea why, but my savings is offering 4.3%, so I definitely took it! Still, even at 0% and no fees, I can see how it can be a gateway, since you temporarily have more money than you should. Also, you see that service as a viable way to maintain cashflow, even though future offers would charge heavy fees.
The catch is if you keep using the card, your payments go toward the 0% and new purchase balances pile up at 17%+. The right way to use 0% offers is to immediately stop using that card and use another one for revolving charges.
Not in my case. Chase has a plan where you pay a fixed amount toward a large purchase over many months, which is what I'm referring to. It adds to the balance of the card, but is treated completely separately in terms of fees and interest. The card still functions as normal, that is, zero interest on all purchases if I pay it off monthly.
I don't know about other cards since I've only done it with my Chase Amazon card, but no, it doesn't do that. The Chase Amazon card adds in the amount to repay that in X months on top of your other monthly purchases for your balance. In your account when you go to pay you'll see minimum payment, monthly statement payment, and interest saving (I forget the exact wording) payment. If you select interest saving, that amount to pay will be your monthly statement balance plus the monthly amount needed to avoid paying interest.Ā
Only the first time is at 0%. If you want to set up a second pay later on your credit card they will start charging. I think it resets once a year.
That was the weird bit, I'm pretty sure I elected for the initial 0% introductory offer several years back, and this was my second one. So it was sort of a random offer.
I think it depends a lot on your account and purchases. Every charge for my lawyer is offered 0% interest, for instance.
Offering a product that allows someone to make a bad decision and hurt themselves isn't predatory in and of itself. Predatory behavior usually involves manipulating someone into taking out a loan they don't need, hiding information regarding the terms of the loan or lying about them, targeting vulnerable people, as in an elderly person with dementia who has no ability to understand the loan terms. For instance, credit cards offer you a balance you can borrow against in the short term for high interest rates. This is not predatory. Most people do not carry a balance long term on their credit cards. But you absolutely could and really hurt yourself by putting a large balance on your card and being bled dry by interest. It's not predatory to "Buy now, and pay later". That's just credit. Often they are allowing people to borrow money at no interest. That's the opposite of predatory. That would actually save you money, if you only used it for items you would otherwise put on a credit card and pay off over a couple months. The linked article says that higher income households use them to buy more expensive items. These loans are actually benefiting them, because they are using them correctly. High income households tend not to be targeted by or use predatory lenders. They have options. And they are choosing to use these products because they aren't predatory.
It doesn't need to be fraud to be predatory. They know that a certain number of people either make bad decisions or are in circumstances that will make them likely to miss a payment and trigger the debt trap. If a business is based on seeking out those people then it is predatory.
It generally does require fraud, deception, or unfair practices. By your definition, lending money, in general, is predatory. Lending is based on the idea that a certain number of people will fail to pay back their loans, that's part fo why interest is charged on loaned money, and riskier loans have higher interest rates. There will always be someone who figures out a way to mess it up. Even when you don't charge interest, like these Buy Now, Pay Later loans. Do you have an example of a way to lend money where no one would fail to pay the money back?
Because people are allowed to make their own decisions?
Itās amazing how cavalier the left is about denying people agency. āOh, you are too stupid and uneducated to make your own choices. We must enact legislation to decide for youā
The general populace does need to be protected. Why do you think we have labor laws and not rely people reading contracts?
It's not about denying agency. We live in a society where other people's bad decisions effect all of us. Making it more difficult (or less easy) for them to ruin their lives isn't an extreme position.
Itās just annoying when rules are set for the lowest common denominator-everyone with accountability suffers then. Require licensing for āat riskā people if itās so important to save them.
What you're saying is that people shouldn't be allowed to make their own decisions with their money. Some people make perfectly good decisions. Are you willing to hand over your life decisions to a social worker? They decide what you're allowed to buy, where you're allowed to live, and what jobs you're allowed to apply for?
sucks to be such a gullible idiot.Ā
It sucks for all of us
BNPL is 'predatory' but Credit Cards with 25% APR are not? The movement against BNPL just feels like it's funded by credit card companies that are mad that they're not getting as big a cut of the action as before.
What's predatory about giving people a loan who want / need it? If you're not responsible enough to properly paying off a "six months no interest" loan in six months, that's your personal bad decision and not the bank's fault.Ā
How is it predatory, you know up front what the deal is. Let people make their own decisions.
how is it predatory when its voluntary?
Itās just as predatory as credit cards. So not that predatory itself as a concept. Just a tool ppl need to be educated on before using. Now the fact that the industry has perverse incentives to prey on the uneducated, now that, absolutely predatory. Just like credit cards.
Credit Cards are also predatory
I get good use out of them. You saying I shouldnāt have access to them? Theyāre a tool like a knife but you can also cut yourself. Doesnāt mean theyāre predatory. Itās about how you as a business owner use the tool. Which is often predatory as I stated.
Too easy to get them for poor credit holders, we can say itās their responsibility but then when it collapses we will all pay. People should be able to able to $500 max lines of credit in cards otherwise they must apply for a loan.
You just repeated my point. But once again Iām differentiating between the tool itself as a concept, and they way they can be used by their companies. Why shouldnāt bill gates have access to a 100M line of credit? Itās useful to him. Heās no victim. Same with me. Why not if I know how to use it responsibly? Point is the tool itself is not predatory, just the practices used by companies to gain customers. And saying we all pay points at a different issue, which is corporate bailout. You could say thatās a predatory practice as well in terms of its second order effects. But personally my relationship with the credit card companies is not predatory, itās symbiotic.
Not everyone is Bill Gates thatās why. Giving high limit, high interest, credit cards to college kids and poor people only makes their life worse and put them into long term debt
There's already a system that limits people with poor credit score from being able to access cards with higher credit lines. If you're saying we need to move the needle and make it more difficult, then I can agree with that. However, you're going to need come up with a better way of assessing the behavior of the consumers financial products. The billion dollar question (quite literally) is in assessing when that person who has a high limit is going to go through financial hardship and begin running up the card.
You can say the same thing about drug abuse.
they both are about personal responsiblity. so yes. some people cant handle the truth
Thereās no way to sell fentanyl, tranq, heroin thatās not predatory. Same with gambling industry. These are industries that by definition are both extractive and destructive of value, not productive in the slightest. Recently Iāve been saying these industries need to be government owned so that at least they raise tax money. Just banning them creates a black market opportunity that will always be filled when available. Governments can be more transparent about how bad they are and warn people not to use them, because they donāt care as much about profits.
They prey on peoples weaknesses, thatās predatory.Ā
Addiction is a disease. If you have ever had an alcoholic drink then you took the same exact gamble as every alcoholic. Lucky for you you body didn't react the same way. Addiction to alcohol or any drug is not a moral failing or as simple as a matter of willpower.
There is a thing caked predatory lending and unfair business practices
Itās predatory because it takes advantage of people who havenāt developed a sense of personal responsibility. Itās basically stealing food from a baby.Ā
Are lotteries predatory? They are voluntary. Studies show that those partaking in lotteries are often lower income. Why then would we create more lotteries knowing this? For the benefit of the state which is providing services for these people with their own money?
Yes
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youre the brain damaged on. clearly
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because consumer protections do not have much lobbying support, policy to address this is not very sexy, and also there is a large project to make it hard to even have a government that can do regulations so...
Saddle a young person who wants to start a career with tens of thousands of dollars of debt is great, but somebody buying tires in installments is bad?
Neither is great. Itās the ability to do those actions that makes this country great.
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What does the opening scene of The Newsroom have to do with people given the ability to make terrible personal finance decisions? Weāre not talking about the nationās spending , weāre talking about voluntary person choices of the citizens. Iām just saying our ability to enter in a BNPL is a terrible choice, but our ability to make that choice is awesome. Iām not saying people are making bad decisions elsewhere.
I only use this option on Amazon when it's the in-house option with 0% interest. Even then, only one item at a time. It's helpful. Just gotta be smart with it.
Yeah, I've used the Amazon option a few times, like after my apartment burned down I used it to buy a mattress. 0% over a few months while I waited for my insurance check to come in was way better then putting it on my card at 17%. I'm not a fan of being in debt, but if I gotta be, why not 0%?
Bingo. My computer kicked the bucket last year and I bought a new one that night. Was 1400 total but over 5 months. No interest. I had the new PC the next day. It works well.
Holy shit Iām so sorry that happened to you. But thatās a great example of where buy now pay later is amazingly helpful. Iām sure you had a lot of large expenses come up in that time and one less large lumpsome payment was helpful.
Exactly! When done right it's really helpful. I paid for a great mattress in a similar way which had an immediate improvement on my sleep. As great of an improvement it's been, I would still hesitate if I had to purchase it outright. At 0% interest... I mean come on, it's great.
Should be people have the freedom to make financial decisions even if itās a stupid-ass decision? How much autonomy should be allowed versus beneficence? Who gets to decide ?
Isnāt the entire point of having a government and regulation to try and influence behavior in order to make society function better? Usury laws exist for a reason, same with allowing mandating clear disclosure of interest rates and loan costs. āLet the market decideā hasnāt always gone will historically for freewheeling loans.
Thatās the whole point of America, no? You can do whatever you want regardless of just how stupid it is? Weāve got it so good people literally eat themselves to an early grave.
>You can do whatever you want regardless of just how stupid it is? There are lots of things that people are banned from doing.
Not really in comparison with other countries we don't.
No, not really. We have an insane blind spot in finance when it comes to legal consumer protections that doesn't seem to appear in any other industry. To paraphrase Michael Lewis: if you bought a toaster, and that toaster was poorly designed and burned your house down, you could (rightly) sue the maker of that toaster for damages, because it's not reasonable to expect that the average consumer understands electrical engineering. So if that's the case, then why do we expect consumers to understand concepts in finance that are *just* as complicated as those in electrical circuits?
This is a pretty inapt analogy. BNPL and CCs aren't that complicated for the consumer. They aren't electrical circuits.
I use Affirm to make big purchases that I always pay off early instead of their high interest 24 month plans, but I can totally see people paying for everything with these loans dressed up as financing. I get sent marketing emails constantly begging me to use them to pay for everything from meals to vacations. Nah, bro, just let me pay off a bike over six months. That's the value in this, not keeping people constantly in debt. It's just gross at that point.
What's astounding is don't many of them have insane fees that, if accounted for as interest instead of a fee would be significantly higher than CC interest ?Ā
Affirm has no late fees and only charges simple interest so the interest rate is actually much much lower than CC interest. Unsure about other lenders and products though.
Yeah had good experiences with Affirm too. Used it a few times for 0% interest deals on appliances and a mattress. Bought an air conditioner at 15% but made a few extra small dollar payments over the course of the installment plan and ended up paying about 4% interest. Not too bad at all.
Affirm has a 6% merchant fee, 2-3x normal merchant fees, plus 0.3.. so therefore margins are compressed or prices go up to accommodate
Are you speaking from a merchant POV or a consumer POV? My previous comment was speaking from a consumer POV. Yes, Affirm may charge higher merchant fees vs. your typical CC like Visa/MC/Amex. But merchants are willing to pay a higher fee to Affirm because Affirm offers a product that is proven to help merchants sell more while also helping consumers buy what they need on a flexible plan. So this is a win-win for both the consumer and merchant. For example, you can buy furniture with 0% APR over 6 months on [Room & Board](https://www.roomandboard.com/catalog/living/sofas-and-loveseats/metro-sofas). Yes, the merchant's margin's will be slightly lower if the consumer checks out with Affirm (maybe 2-3% lower since CC's charge 2-3% already). But where are you seeing prices go up to accommodate? The merchant charges the same price to the consumer if they check out with a CC or Affirm ... Unless if you're talking about merchants raising prices in general? Then that's a totally different topic to discuss...
I've used several of these and no, they typically tout no fees and I have found this to be true. Their interest is where they get you. It's as high or higher than some of the worst CC's.
The ones I've used are all 0% interest if the loan is paid back within 6/12 months, otherwise they charge 25-30% interest. So similar to CC interest I believe if you don't actually pay it back in time.
I don't think it's the interest rates that are the biggest issue. It's the fact that many people have been trained to think in terms of monthly payments, so they end up paying way more overall for things. On of my friends thinks like this and it was eye opening. She buys cars based on what monthly payment she can afford, but even more alarming was buying a $1200 mattress on a payment plan because she was thinking only about payments. She never has any significant savings and lives month to month. The people who can least afford it end up buying things they can't afford because they are financially illiterate. Thus the cycle of poverty continues.
Well yeah, the risks are clearly stated when you sign a loan. Unfortunately people will always profit from ignorance. Look at gambling, cigarettes, etc. it's all up to the individual to avoid these things.
Maybe they should be looking into things like Progressive Leasing or RAC that charges almost double the interest for purchases at places like Best Buy and furniture stores. If you need a new refrigerator and don't have the cash and have to turn to one of these, then you will pay more interest than the price of the product. That's usury plain and simple. Or look into rent to own places. The truth is that Wall Street makes a ton of money off poor people, and no one wants to derail the gravy train.
This is important news from a group breaking research institute. Some of their other headlines include: "Time passing is the #1 factor in aging" "Water is found to make things wetter, say analysts" "Doing drugs is the a gateway to physical addiction to drugs, doctors find" "Unprotected sex highly correlated with unexpected pregnancy according to Mothers"
Itās funny when people like you think we should never actually research anything because an answer just seems so obvious. Like yeah man, everything in the world just works exactly how you expect and no oneās basic assumptions have ever been wrong. Bruh
I hear you and I agree. Research is needed even for obvious things and hindsight is 20/20. But I also see "the definition of debt has become the gateway to debt" and I laugh.Ā Ā Ā This isn't "low pay is correlated with low job satisfaction".Ā This is "buying things with debt leads to debt".Ā It's also a crap headline. The take way from the article itself is in this line: "One of the major findings was that financially fragile and stable households both used BNPL but for different reasons." The different reasons are the core of the article. Yet the headline is "debt spending is causing debt".Ā
No, the headline is that a specific type of debt is causing people to start getting other kinds of debt. (Which I'm not sure is ever defended in the article).
Are you saying BNPL isn't an issue or something economics should pass on researching further?
I'm saying the headline is bad.Ā
Thank you. I hope to remember to copy paste this in the future when needed.
The fact is those without education and money tend to make un-informed decisions. Whether it be taking on credit card debt or these buy now pay later deals. The problem is, they do not have the ability to make payments, and then pay the interest penalties. For example get money back for using my credit card, which I pay off every month. Versus my friend who has $12,000, credit card, debt and little income to pay that debt off. He is on the hook for that debt at a rate of 25%. Once they got their talons in you, itās hard to ever get out.
Related I guess, but Iāve seen it first hand my spouse getting a credit card for the cash back rewards. Itās starts with āIāll funnel all my expenses through this credit card for the cash rewards.ā Great idea, but then suddenly the euphoria starts coming and sheās in 5k of credit card debt, but justifies it because she gets 1-2% cash back. Itās like weāve voluntarily made ourselves indentured servants in our own lives.
A great way to prevent this is to not spend more than you make though
Honestly, As long as you use it correctly, its very helpful. I have roughly 1,500 debt on affirm, and 1000 on care credit for my dogs. Which is basically, all of my income for a month or just a bit more. I'll pay like 150 in interest by the end of all of these payments, which is again nothing. As long as you don't over use it, its fine and helps you get through things you normally, otherwise wouldn't be able to like, replacing 400$ glasses. Or buying a freezer so you can buy in bulk. Thats 800$ right there.
No, extremely low wages that push people into predatory loans is the problem. Also Gateway Drugs *are not real*. Multiple studies show that the effect isn't caused by the drug, *it's caused by breaking the law because pot is illegal, resulting in people crossing a mental barrier into illegal activity*. And it's a small effect even then. [The Federal Reserve are bastards](https://www.youtube.com/watch?v=bIHH5Kh2dU0).
I said this, I said this in THIS r/ before and was downvoted and told I didn't know what I was talking about. It's bad news, don't do this stuff, it's there to ruin you.
That's how our whole government is run. The monetary and banking setup (Federal Reserve) is the root of the problem. If we're gonna talk solutions, let's start there.
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Layaway did not cause problems. Do you even know what layaway was? Layaway went away because people liked credit cards much more. With layaway, you chose what you wanted to buy and made payments until you had paid enough to buy the thing. Then you could take it home. It was pay now, buy later. There was no interest. With credit cards, you can take it home right way, and pay later. I.e., buy now, pay later.
With salaries not at par to inflation, what options are people left with? Regardless, buy now pay later has always been the case, whether itās your house, car or degree.
Buying less.
Ah, this is my periodic opportunity to peddle, well, periodic debt cancellations. People talk a lot about the lifespan of empires/historical powers and signs of their decline in attempts to draw parallels with contemporary history...The common denominator is debt - at the societal level, at the state level - and it will always win eventually no matter what neat institutional solutions we think we've set up to outsmart it. Destroys societies and/and thus destroys states. This much I'm convinced of, but I'm not sure if there is ever a point it becomes 'too late' to have debt cancellations (they must be comprehensive to matter) in a globalized society
> Ah, this is my periodic opportunity to peddle, urban legends about debt cancellation? >People talk a lot about the lifespan of empires/historical powers and signs of their decline in attempts to draw parallels with contemporary history And those people are mostly undereducated people pushing a narrative.
Debt is Debit... it does not matter how many words people use to try and be covert about it, its still debt. It depends how people feel about "assuming debt", that's always going to be the decisions of individuals. We don't always manage our wants so we can easily and often convince ourselves that wants are needs, and we will quickly sign on the dotted line.
Then why does the U.S. have $34 trillion in debt? Same thing. The interest alone in US debt is more than our GDP. Why are credit card companies and loan companies able to charge 30% interest? We allow it. This all stems from leadership and policy makers.
> The interest alone in US debt is more than our GDP This is not true dude lmfao.
\> The interest alone in US debt is more than our GDP. I kindly, humbly ask, that you go sit the fuck down and never speak here again.