Gen Z is drowning in debt as buy-now-pay-later services skyrocket: 'They're continuing to bury their heads in the sand and spend'
Gen Z is drowning in debt as buy-now-pay-later services skyrocket: 'They're continuing to bury their heads in the sand and spend'
Internal data shows member credit card balances are up more than 50% for Gen Z and millennial members since March 2022, when the Fed started raising interest rates.
Summary
Gen Z is increasingly relying on “buy now, pay later” (BNPL) services for holiday shopping, with spending projected to rise 11.4% this year, totaling $18.5 billion.
These services appeal to younger consumers with limited credit histories but can lead to overextension, as they lack centralized reporting and encourage overspending.
Experts warn of accumulating fees, particularly when BNPL plans are tied to credit cards.
With inflation and rising credit card debt already burdening Gen Z, consumer advocates caution that these services may worsen financial instability despite their convenience.
When you think there's no future, there's no need to plan for one.
Gen Z knows that they're gonna have bigger problems than debt.
Why isn’t this framed as predatory lending?
I'm not sure because it definitely is.
The whole selling point of services like Klarna is they don't show up on your credit checks, meaning you can very easily take on too much debt.
For the same reason that the subprime mortgage crisis wasn't; line go up.
Eat, drink, and be merry, for tomorrow we die.
In this age where you can quickly spend thousands online (or even in person) without having to actually watch any of it disappear, and corporations are hiring psychologists to make their services and platforms as addicting as possible, you're gonna get a lot of this
I see everyone in the comments saying that Gen Z have checked out and are waiting for the end but I really don't think so.
I think it's never been easier to manipulate a person to separate them from their money and things are deliberately designed that way. Big shiny upgrade now buttons, services forcing you onto 7 day free trials for premium plans upon signing up, expensive yearly subscriptions for products that ten years ago would have been unthinkable as anything other than one time purchases, you name it. Capitalists have used the internet to minmax their penny pinching.
to take this a step further, imagine someone who has been exposed to these services designed to be addictive their entire (digital) life, as well as being pushed further into these services by their peers who are equally addicted and the "influencers" they look up to that are paid by these services.
Yep. It's seriously remarkable how deeply these fuckers have sunk their claws into our social fabric. Literally every possible tactic they can employ to suck as much money from as many people as possible, have been employed, consequences be damned no matter how severe. This cannot be allowed to continue
People do tend to learn defenses against the environment in, so Im surprised.
Does it matter. It seems that a lot of them have checked out already as they see the world burning around them.
Hard to blame them.
I swear on everything that I've read this article word for word years ago but replace gen z with millenials
We didn't have this new term buy now pay later to the same extent, the millenials version just called credit cards credit cards.
You don’t have an Aaron’s or Rent-a-center in your town? I’m a millennial and half my formative years were spent on a rent-a-center couch and bed. Half my belongings in my first house were rent to own, now that i think of it. I spent a lot more because of interest and scams but i had zero financial literacy then and i needed furniture. Without a credit card your options were/are limited.
PayPal had zero interest payment plans as far back as like 2010. I'm actually a bit surprised it didn't take off sooner.
Basically reddit 10-15 years ago. The doomsday edging gets stale when you realize things are cyclical. Millennials were supposed to implode with debt by now. An economic cycles or two later and that didn't happen. Now it's Gen-Zs turn to be on the brink of doom.
lol time to write an article vilifying young people who somehow aren’t thriving in our flawless economic system. What self-indulgent idiots they are. Where’s my Pulitzer?
If were going to slip into a period of hyperinflation then taking on tons of consumer debt is just good financial planning.
This is correct, although usually you'd want to go into debt on something like housing but let's be honest, that's not possible. Why not pay an 80 dollar door dash across four payments?
Isn't that only if wages increase alongside inflation
Oh no. If a fistfull of trillion dollar bills will buy you a shot glass of rice that maxed out credit card from the before time is pointless either way.
If $1,000 today is worth $5,000 tomorrow, you want to spend that $1,000 today so that when you pay up you only pay $1,000. Even if inflation hits you, you still only owe $1,000 no matter how much actual value those dollars still hold.
I mean, we've been telling them their entire lives that the planet is doomed, and they have no future... So why the fuck not bring on the debt?
Because rampant over consumption is the reason the planet is doomed.
This is really interesting. Layaway purchases in stores used to be popular but went away in the late 90’s. It’s back now as BNPL, with much worse terms.
Layaway purchases in stores used to be popular but went away in the late 90’s. It’s back now as BNPL, with much worse terms.
Lawaway is superior. Laywaway had zero interest charges. Some places charged a flat fee, but you also didn't get your item until the full balance was paid. There's no chance of a lawaway purchase spiraling into a huge expense. The expense is fixed at the time of layaway and never gets higher. Lawaway also builds the ability to delay gratification, which is an important life skill that is sometimes not common.
BNPL has none of that consumer protection.
Correct me if I’m wrong, but wasn’t the key difference in layaway that you didn’t have access to the item until it was paid off? I remember my mom putting holiday gifts on layaway at Walmart. They’d be kept in storage in the back of the store, and would be given over only after they were fully paid off.
Buy now/pay later plans allow the consumer access to the item now, with a payment plan to follow. It’s much more akin to credit than layaway.
Yes. You had the honor of reserving the item from sale by paying more. BNPL is like the boss in its final form. You can have but don’t own it. Maybe it’s more akin to old furniture places with leases.
https://www.retailmenot.com/blog/walmart-layaway.html
Walmart actually just stopped layaway entirely in 2021 for BNPL.
Stuff like this is why the headline Econ stats do not actually reflect reality.
Sure, there's lots of room for critiquing how the media and the investor class focus on stats that are not actually representative of things on the ground for fairly complex mathematical/economic reasons, but that conversation requires people to have a Masters on Econ to understand.
What does not require this is the much simpler: They do not take personal debt levels and credit scores into account.
People say things like 'inflation is going up' 'i cant afford as much as i used to' and ... the main actual reason for this is usually that they're drowning in debt, but are either unaware or don't want to admit it.
This is a country where 54% of adults read and write at below a 6th grade level. Probably a comparable amount can't actually do their own budget.
...
It doesn't matter if your wages go up 2% in a year if you had to spend that year buying groceries on credit to not starve, and those all have 16 to 36% interest rates.
Systemic issues can only be solved with systemic changes.
No amount of shaming individuals will fix systemic debt issues, if this is such a large trend that it effects most of the generation then it can only be fixed with systemic changes.
The narrative that individuals are responsible for widespread debt is propaganda meant to shift blame off of the rich people causing wealth inequality to skyrocket
No clue how you read myself shaming individuals into what I wrote.
I was writing to explain why everyone feels poorer than all the headline Econ numbers say we should feel.
Why all the libs who spent the last year or two telling us 'the economy is fine actually' were just factually wrong, functionally gaslighting everyone.
If anything, I call out the media, media friendly 'economists' and business people for perpetuating bullshit.
Obviously a general explosion in personal debt levels is a general, systemic problem with systemic solutions?
...
I am all for systemic solutions:
Tax the Wealthy / Tax Corporations
Get rid of student loans, do free tuition
Do a total debt jubilee for those below I dunno 200% poverty income threshold
Cap all consumer credit instruments of all kinds at 3x the Fed Rate
Raise the threshold of income for SNAP and LIHEAP and EITC, etc
Implement universal healthcare, outlaw private insurance, lower costs
Raise the minimum wage
Rent control, automatically expunge all eviction records after 1 or 2 years, actually fund building public housing, write a law that says if a house or condo is on market, unsold, you must drop its price by 5% for every 3 months it remains unsold...
Blah blah, tons of things we could theoretically do.
Who is teaching them financial literacy in the first place? Because they aren't being taught it in schools. Meanwhile, these predatory companies do everything they can to convince people to use them.
I hate BNPY so much... I deleted my after pay account, which means I can no long use their services unless I get in contact with support to reopen my account. I did it to explicitly make it near impossible for me to be tempted. It worked. There were times I felt regret, but it was 100% the smartest move.
Then, PayPal introduced pay in 4... All my hard work went right down the drain. I can't afford this shit but fuck it's hard when you're clinically depressed.
Services should be required to allow you to opt out of being offered such things. I choose to live a debt minimal lifestyle because of how I was raised, and I don’t want to be tempted. The same goes for online gambling. (And alcohol advertisements, but I do drink).
It's all well and good to blame the generation that can't afford shit to use payday loan companies to buy shit...but when these companies align with the likes of Dominos Pizza to allow you to buy a pizza and pay off in several weekly installments, maybe it's time to blame prices for being ridiculously high?
Pizza is not a necessity and adding predatory marketing doesn't help. The whole point is to extract money from as many as possible including the ones that really cannot afford it.
Pizza is not a neccesity but at the end of the day we can't expect everyone under 30 who doesn't have well off parents to live on beans and rice. People aren't robots and while no individual luxury is a neccesity, luxuries as a whole are a neccesity to some degree.
Is this actually worse than the five figure credit limits gen x had extended to them? Boomers had store layaway, which really seems ideal for holiday shopping, but there's no money to be made with it so of course it's fallen out of style.
five figure credit limits gen x had extended to them
chase gave me a $17K limit before i was even 20 in the 90s. i know more than a few people who would have had that maxed out the next day
If your outlook on life is "work until you die with nothing left over", might as well take back something first. The debt will pile up one way or another.
So, I'm going to come to their defence a bit here. Most of this is also covered in my comment I made further into the thread.
I don't think previous generations were any less financially literate on average. You've always had those careful with credit and those that didn't seem to care, or didn't understand the ramifications of their decisions.
I grew up in the 80s and 90s and most large stores had their own store credit system with 30%+ APR rates. Plenty of people that were boomers or gen X had those accounts, and would routinely buy more whenever they cleared their credit a little.
You could also get credit cards and each card in terms of spending power would have similar limits to what you have now. And there was no shortage of people that would be sitting on their credit limit all the time. I knew people in the 90s that had no idea how interest worked and would be sitting on their credit limit paying back mostly interest all the time.
I think the difference is the ease with which you can gain access to credit now.
In the 80s and 90s you generally needed to go into the store to get their credit. You needed to go to a bank or fill in paperwork in the post to get credit cards. Crucially here, generally there were less providers of credit. Credit cards were often offered by banks, there were not so many resellers of credit. To gain a line of credit you had no chance to ever repay took more effort and as such wasn't so much of a problem as it is now. It was still a problem, and companies routinely made money from the financially illiterate, even then.
What I think is different now, is that you can get credit from a few screen swipes on your phone now. There's many many more providers of credit too. As such, the ability to get into an irreversible credit position is much easier. I would put money down that the same people with £1000s in various store credit/cards all compounding interest at 30%+ in the 90s, would also be in huge debt if credit were as easy to get then, as it is now.
I am going to blame financial institutions more here (those getting into the mess are not entirely free of blame). There might be over a thousand sources of credit now, but they all funnel up to a handful of large finance institutions, and they're the ones really burying their head in the sand pretending they don't know this is happening and couldn't do anything to stop it. They most certainly could prevent it, if they wanted to. It just works better for them to have a generation that is constantly paying interest on never repayable debt. Even factoring in the few that will be written off.
Yes, ultimately we all have our own responsibility not to get into these situations. But I don't think Gen Z or any generation are or were better at this on average. It's just the conditions that allow it have changed, and continue to change.
they're the ones really burying their head in the sand pretending they don't know this is happening and couldn't do anything to stop it.
"It is difficult to get a man to understand something, when his salary depends on his not understanding it."
Well when the world is about to end in multiple ways at once, why with about debt?
In other news, the interest rate on unsecured pseudo-credit services is very high.
Now over to Dave with the weather.
I thought we did the whole credit crash a century ago.
We had a pandemic, radical credit spending, nazis, the writer is remixing the previous season. Lazy.It's almost like the "services" are designed just for this...
Yo dawg I heard you like installments:
Recently I noticed my credit card lets me move transactions into installments. So, you can put an installment into installments now. When you go bankrupt you can pay off your debt in installments too.
They’re just waiting for the trickle down
The absolute irony of the paywall
If the outcome is the same whether you save up or not - you'll never be able to afford anything - why now "own" things while you can?
Never pay them anything back!
You can actually survive without streaming services and online subscriptions.
Is this today's avocado toast?
It's today's variant of "beans and rice cost, x. So why are you complaining about food cost?"
Man imagine the privilege of worrying about not having streaming services as an essential need.
BNPL is a credit card but in app.
Nah more credit check hits
No, bnpl do soft pull, so that credit check doesn't hit your credit score (unless you default on bnpl)
genZ is the least empathic gen i have seen yet. gives me hope future generations can learn from that.ql
I mean, you get out what you put in. Is it a surprise that a generation that's growing up in a predatory world without empathy lacks empathy?
you think previous times were LESS predatory? like when? back then rape was legal, war was just over, alcoholism ....dude, how is it worse?
no. it is always the people themselves. maybe plastic retarded them? i mean swifties dont even allow a discussion on taylors remarks with kanye west. an entire fan generation ignores that she is the culprit.
Keep on buying plastic shit, I’m sure it’s gonna be fucken great.
Dumb gen Z
It's the 1% vs the working class, not generation vs generation.
