Buy Now, Pay Later Apps vs. Credit Cards: The Pros and Cons | WSJ

[@ritokazoriv]

Giving people credit who wouldn't be able to normally ... sounds awfully similar to the sub-prime mortgage lending crisis

[@kumarapillay3122]

whenever ppl make companies that can only operate by finding loopholes around the law, eventually when it blows up, the laws becomes stronger and not the companies, thats essentially what happened in the subprime mortgage

[@KMon99]

yes, but no in the sense that these are all small transaction. I just don't think the aggregate is enough to trigger a crisis/concession by its own even if they fail at 100%.

[@beepboopbeepp]

@@KMon99 only way i could see this go wrong would be if they demanded the money from consumers all at once due to some crisis

[@Blaze6108]

It's literally the same thing. 1. Loan money to everyone and their mother, even when they clearly can't repay them. 2. Claim your are totally as "valuable" as the combined theoretical payout of these loans w/ interest. 3. Trade your "value" as financial assets and derivatives for big cash on the market. 4. Everyone and their mother inevitably fail to repay the loans, "value" of assets instantly goes to zero, market crash. 5. You made billions at the low low cost of ruining the economy. This seems to be the new MO of the financial class. They endlessly create debt, sell the debt as an asset to get rich, then laugh as the economy implodes because they filled it with toxic debt.

[@Blaze6108]

It's the endless conundrum of personal finance. On one hand, we're told we need to be responsible and not accrue tons of debt because debt has inherent costs to you and incurs in possible unexpected issues. On the other hand, the banks who control the financial system want us to buy as much debt as possible since they make money from it, which is why your credit score goes up when you accrue debt and then pay it on schedule by incurring in the full interest.

[@Tokoroa3420]

I was a portfolio analyst for one of the BNPL companies, just a warning, it is much harder to get out of BNPL debt than credit card debt. We did the math and it also scares us.

[@mikea5745]

What happens if you just don't pay BNPL debt? Do they garnish wages? Will they take you to court? Or will it just be a ding on your credit history?

[@marc-andreservant201]

​@@mikea5745Most likely they will sell your debt to a collection agency, who will do all of the above. The good news is that you can often negotiate with those crooks, but it won't undo the damage to your credit score. Klarna might not show up on your credit report, but a judgement from a debt collector definitely will.

[@bozskosamu]

Why and how is that?

[@fuchsia02]

I don’t understand why it should be harder than credit card debt. If it is truly interest free, it should be easier to pay off than credit cards

[@mattm2507]

@@marc-andreservant201 A junk debt buyer cannot garnish your wages with no judgement against you, they can try to sue you and receive that judgement and they can report a delinquent account and that’s about it. When they litigate they are hoping for default judgements due to the other party not showing up, show up and fight them and chances are you will win, because they don’t come prepared and often times inflate debt illegally, and report that inflated debt to harm your credit score(s), they are often outside of the statute of limitations as well. I have won twice and both cases dismissed with prejudice one was against Chase Bank, and the other Dell. Anyone thinking they may find themselves in court against a debt buyer may want to look up the FDCPA and familiarize yourself a little bit, also FCRA.

[@davidcantor293]

BNPL makes sense with appliance or other large purchases however, if you need to use it for a pair of shoes then you clearly cannot afford it.

[@oko2312]

I’m only using BNPL to purchase all necessities, as $1 today is worth more than $1 tomorrow, but this only applies if ur buying necessities. People that use BNPL to buy luxuries should let their parents handle their money lol.

[@Stratus41298]

It can be helpful to offset the upfront payment though with a few smaller ones.

[@user-fd8vu2yl1f]

💯

[@ruzzelladrian907]

I only use credit cards. I use it like a debit card. That's the key. But these buy now, pay later services are quite useful for those who want to spread out the cost of paying for their purchase in increments.

[@CinematographyLischka]

The practice of "buy now, pay later" is prevalent in business transactions where bills are payable within 60 days.

[@Truth-of-the-matter]

Pros and Cons to everything. I've used Affirm many times (and usually pay off the loan long before it "ends"). I've paid little in interest overall. Often my purchases have come with a 0% interest rate which you wouldn't see from a credit card.

[@FIDEL_CASHFLOW_]

If you pay off the credit card at the end of every month you will have a 0% interest rate on that as well. You should not be using any form of credit whatsoever if you can't afford to pay off the card in full at the end of every month

[@adityapatel9735]

You are missing on up to 5% cash back on these transactions that you can get through credit card.

[@roadrunner6224]

If you only bus something, because it gives you the ability to pay in installments and it isn't a house, maybe rethink if you should really buy that.

[@karmasutra4774]

I agree, but if there is no interest or fees it can help you not have to pay for something all at once. I did do it for my theme park annual pass. But normally don't

[@Rust_Rust_Rust]

I've done this with phones and other expensive electronics and I wind up paying it before the last payment installation. Buy now pay later helps with expensive purchases so I don't have to pay it all upfront and can still buy the item right now rather than wait a few months.

[@amirmirzaei3940]

@@Rust_Rust_Rust here is an financial advice from me. if you can't afford it up front now, then don't ever buy it. cause you have no idea what will happen in 60 days time, you might have to all the sudden spend that money on a random emergency which you couldn't do anything to avoid it

[@Rust_Rust_Rust]

@@amirmirzaei3940 I typically keep an emergency fund with 6 months of expenses for things such as that.

[@smug_slime]

⁠@@amirmirzaei3940yes and he/she’s just do exactly that and more.

[@Viviko]

… as a millennial… I think BNPL is fiscally irresponsible. If it was some real estate or something, sure. But, BNPL… I avoid it at all cost.

[@J2theP2theG]

i agree! only buy things that you can afford at the current moment.

[@LeadLeftLeon]

BNPL shows how poor Americans are now

[@mikea5745]

As a millennial, you should remember what happens when people who can't get approved for traditional credit are given it anyway in order to purchase real estate. Not a good idea.

[@Viviko]

@@mikea5745 As a millennial, I don’t like to look at the past. I can’t control it anyways. My plan is to just expand my web dev business enough (or start a separate SaaS company) that can eventually allow me to buy real estate with cash. I can’t control that our parents got Real Estate for cheap. I can only control what I do. Unfortunately whst I can do ( and have to do) involves giving our dear parents the middle finger and going my own way.

[@Seanpfree]

A great way to transfer wealth from you to companies

[@krishp1104]

if it's at 0% interest I don't see any negatives.

[@michael2275]

Enjoy staying poor

[@adityapatel9735]

you miss on credit card cash back.

[@adityapatel9735]

@@NotKimiRaikkonen they make money by avoiding the transit fees for credit card swipe

[@owenswabi]

@@NotKimiRaikkonenthey’re making their money through merchant fees. It explains this in the video

[@gustavocalixtodesouza7537]

Crazy to think that here in Brazil it's been pretty normal for a long time to use credit cards to pay in installments...

[@BlueToronto]

Yeah. I'm from Canada, and have spent a lot of time in South America. I'm amazed at how paying for something in installments is a basic service offered by bank accounts for any purchase. Canada and the U.S. are behind the times.

[@vadim6385]

Israel, too. I have bought many things on installments with 0% interest. It's basically a free loan offered by credit card companies. It weirds me out how the US credit card companies don't provide what is a basic service in most of the world.

[@houchi69]

And this is why Americans will never be out of debt, when we continue to promote this kind of irresponsible spending habits.

[@romainbourque]

the whole capitalist economy is based on consumer debt. imagine having to fork over 50,000$ on the day you buy your new car, think they'd sell a lot of vehicles?

[@KingBritish]

You owe 13tn you ain't getting out of NO debt.

[@owenswabi]

@@romainbourqueat what point does east access to debt create a feedback loop with asset prices?

[@bryanpascual3543]

I fell for BNPL but then I realised it's better to save up for something/somexperience you want first is a wiser choice!😎

[@IgorDellaPietra]

"never buy something with money you dont have" thats what my mom taught me, and what i live by.

[@கோபிசுதாகர்]

Then never have a mortgage on a house, either

[@owenswabi]

Boomer brain

[@rachmadsuhartono]

Pay later services are also booming in my country of Indonesia

[@pachoelherrera]

If done correctly, this is a win win for both parties. But their intended user base is usually just 5% of the total user base. The rest use it as a glorified payday loan

[@I-Know-Best]

As an investor, I would be afraid of companies that advertise these BNPL options heavily at checkout and while shopping on their websites. This is a short term solution to increasing their sales that can backfire heavily if they don’t get these debtors to pay back what is owed. Loosening your credit policy to meet certain revenue targets is a huge red flag to creditors and investors of these companies. Especially if they aren’t also increasing their allowance for bad debts on their balance sheets. To see if this is happening with a stock, look at their most recent 10-K which has balance sheet data from the past 3 years (as required by the SEC). Then, see if their Accounts Receivables (AR) is increasing year over year faster than their Cash account. This might tell you if they’re selling too much on credit.

[@MarkWTK]

thanks for the lesson :D

[@Entertainment-]

You don’t understand how BNPL works. The retailer gets paid immediately in full, it’s the BNPL company that’s on the hook.

[@I-Know-Best]

@@Entertainment- In that case, I can't see these companies lasting through any economic situation where the consumer pulls back from major discretionary spending. They are thriving right now because people still have their jobs and paychecks coming in; it's just inflation stopping them from being able to afford the products that BNPL is being used on. Once that income goes away, consumers will be on the hook for these monthly short-term loan payments that have probably become a sizeable chunk of where their paycheck was going. And with student loan payments resuming, I see the belt getting tighter and tighter for Gen Z, putting them in an incredibly precarious situation if markets were to turn.

[@monkee_rocks]

we at Monkee are big believers in Save Now Buy Later as the responsible alternative to Buy Now Pay Later. We support people to reach their consumption goals without debt.

[@vladislavkaras491]

Thanks for the video!

[@RappingManualYT]

Adding more debt options to a generation accustomed to living beyond their means and looking good while doing it. Bravo

[@amirmirzaei3940]

I think if they are too stupid to control themselves, they should live their whole life in debt. thank god the supreme court didn't forgave their debt only for them to get more on top

[@owenswabi]

Yep, and we have your generation to thank for that

[@egde]

This business should focus on more expensive items like houses or cars. I believe there's potential in this market, but we shouldn't go after a market that's already filtered for risk, as it would just load people up with more debt😢

[@owenswabi]

So you just want access to long term debt without interest? Maybe go through a Muslim company

[@ThatMetalAsian94]

As long your careful and able to pay back use it, its not bad but can be dangerous is you over do it or cant pay back

[@Edmund.]

unless you live by weekly wages, buy now pay later is like paying in full, i use it time to time for promotions, i guess it's different country by country

[@mgh62000]

I only use Klarna for bnpl.

[@wizaaeed]

Isn't this what the government has been doing for the past 20+ years, I mean 30trillion debt is a buy now pay later, kind of

[@whymeeee]

yeah but its like they have to pay themselves in the future, its like you borrow from yrself in the future smth like this

[@ReflectionOcean]

- Consider BNPL for accessible installment payments without interest (0:15) - Understand the risks and lack of regulation compared to credit cards (2:59) - Merchants may pay higher fees for BNPL services as interest rates rise (4:36) - Watch for the evolving competition as BNPL firms offer more services (5:01)

[@Semper_Iratus]

The deeper in debt you go, the more of a slave you become.

[@njiomonansichristianfreder6374]

💯

[@ScottMaday]

Here's an idea... if the only way you can afford a $100 pair of shoes is through a BNPL service... maybe you can't actually afford them and need to rethink your purchase decision.

[@stephaniehale946]

*Did you even talk about the business model?*

[@jimrobinson9979]

My take away is that it's the same as credit cards, they are charging the retailer a small fee to allow customers to use the service.

[@owenswabi]

@@jimrobinson9979that’s it

[@gustavostabe2490]

Oh lending to people with no real background checks, that’s never gone horribly wrong before....

[@sa-heal]

Hi I don’t want to sound irrelevant but I am getting into youtube video making recently and I really like the background music going on when lady explains things. I think it can suit in my videos so can I ask to get any link or file to get that tone please.

[@navajyotichetia8968]

In most countries credit is regulated- anyone or anyone's store cannot claim legal liability for a credit given if they are not registered and structured as a credit company

[@haridasification]

The RBI has put brakes on it

[@robert8311]

Just use a reward credit card and only buy what you have in your account This easily can get out of hand

[@johancancino2410]

I personally use BNPL and if i'm satisfied with the purchase i pay it right away, idk why i like it better than buying with my own money and data on random sites

[@5thElem3nt]

Yes, that's how i do it, too. When I never bought something on a site before, I usualy use BNPL. Later, if I feel safe with a shop, I usually switch to an other service, which is cheaper for the sller ( and in the long run for me, too).

[@zamudio5595]

I use Affirm and it’s great 👍

[@jaspioncreizi7178]

Installment payments are pretty common in Brazil for a long time. But you should use this tool with responsibility, otherwise you'll go bankrupt

[@HiTechBoy96]

Just pay that small amounts back on credit card?

[@shunnybunny]

the funny thing is that depends on where on the credit card bill cycle you are at, credit card can also be up to 60 days no interest...

[@BlueToronto]

Affirm is useless. They denied me, I guess based on my credit. Well, if I was loaded with cash, I wouldn't need their useless service. Why pay interest when not necessary? It's because of my situation that I want to pay for something responsibly over two years, instead of all at once. Like I said, useless.

[@runabath]

Bubble wait for the pop

[@shanegreen6384]

and they don't affect your credit score

[@untouchable360x]

More like "Buy now, Pay forever."

[@owenswabi]

Not even close

[@JaimeKing-b6z]

❤ 0:14

[@joec1920]

More ways for consumers to pay means more power to the consumers. I would like to know whether it's possible to use BNPL with a credit card. That way, I get a longer grace period and let money work for me instead of the other way.

[@tiagoquental1029]

It's a dangerous game you're playing my friend, a very dangerous one. Good luck, kisses

[@ThatMetalAsian94]

It fine to use a bnpl if your using it for one to two items, 1 want and 1 need but can be dangerous if your using it to buy everything you want think you'll pay off your outrageous loan

[@MediSpring]

a credit card is a "pay later" option.

[@InderjitSingh12]

seems like predatory money lending idea like payday loans

[@leandrowngo]

This methodology is also loosely how Chelsea Football Club can afford to buy so many players.

[@aelius1987]

Please increase the loudness of the audio.

[@denisruskin348]

Hate this culture, same for credit cards. If you can't afford something, work and then get it.

[@auro1986]

advertising in wsj is behind buy now pay later apps

[@jesseinfinite]

So buy now pay later is Americans discovering EMIs? That has been in India for ages?

[@luisnin3780]

It amazes how ignorant both professors, analyst and people are with BNPL. The BNPL business has been in place with Merchants and small business for years. Many Merchants are paid in 3 months minimum with zero payment usually until the 3 months have passed. It also amazes me how the federal government has gone after BNPL without touching banks that charge 38% on credit cards…..and the biggest issue is with the banks and not with the BNPL is the amount of debt the consumers already have, but the fed does not make any mention of this. BNPL loans are small in comparison what you can buy with a credit card, yet everyone is here and in the market is like sheep believing everything negative about BNPL. Ant the most positive with BNPL is the zero interest that most people get and avoid fees which are normally charged by the credit cards…. It shows who is in charge of our economy and anyone who challenges the credit card gravy train…..will be crushed….and the dumb consumers believe the banks….it shows how dumb the consumer really is, they rather pay fees and interest instead of having in the discipline to use BNPL a better alternative……

[@spazzmaticus1542]

Creditors employing the boiling a frog technique

[@DesmondShuford-fy2bj]

These business models go to the banks and get loans and then issue them out to the Millinieal family.

[@karmasutra4774]

I like the credit card no interest for 18 months deals I get on my credit cards. Using that for my new roof. But I always pay it by the due date to avoid fees

[@alexandrugheorghe5610]

Hi 😁

[@brockhubbard6336]

If you don’t have the money, just don’t buy it🤷🏼‍♀️

[@SHOTIMELV]

tell that to our senator who are increasing the debt celling

[@stevenluo9516]

Oh look at all those Affirm employees in the comments section. If only people start using the 4 function calculator, let alone a smartphone, and all those Affirm employees will be out of a job soon. Reading glasses are some tools that may also help send these employees filling out unemployment insurance benefit applications soon.

[@samueladler8233]

0:35 "Young millenial" those two don't mean the same thing anymore. The oldest millenials are 42! That's older than the average American.

[@psnisy1234]

Poor plebs

[@dsz1195]

It took me 20 seconds to realize this business is not sustainable

[@kwhandy]

it's ridiculous to hear such of pessimist thought from mizuho ppl while they also invest in bnpl company(in asia) i think you guys contactinh the wrong person

[@farkasambrus5741]

This is very alarming, they themselves say that they give credit to people who normally wouldn't be eligible. They also admit that they cover their costs by acquiring new customers, which is basically a pozi scheme

[@LeadLeftLeon]

BNPL shows how poor Americans are now

[@NotKimiRaikkonen]

More like financially illiterate. If most people wrote out a budget and saved their leftovers, they'd be fine.

[@WilliamCarterII]

Its kinda crazy how they're glibly talking about a structural failure in the capitalist system lol

[@leszekkot3373]

yay another method to get in trouble financially. can't afford it, don't buy it until you have money saved up to pay off your credit in full or pay cash.

[@rya.]

Just use ur debit card 😅.

[@Collinsv8]

What an irresponsible business model to fuel consumer culture and increase the prevalence of personal debt. If you don't have funds to pay for clothes today, it might be difficult tomorrow as well. It's a slippery slope.

[@borisb1831]

Never do bnpl

[@TransKidsMafia]

My newborn is trans.