Are Buy Now Pay Later Loans a Good Idea?

Buy Now Pay Later loans are becoming the newest, trendiest way to spend money you don't have... but are they really safer than credit cards?

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[chaplainsunshine]

Weird how Phil went from dad moustache to Skrillex hair.

[robertthomson]

When I got my first credit card many years ago, my father gave me one piece of advice..."never use it to buy anything that you can't otherwise buy with cash". In other words, it was simply a tool to avoid having to carry around large sums of cash. I've never wavered from that rule and thus have never paid interest on a credit card. And now we have BNPL loans, which are just the latest fad seeking to encourage people to buy things that they can't afford. My children, sensibly, have eschewed them, since I gave them the same advice that my father gave to me.

[sovashadow]

While I empathize with anyone that desires something now, but hopes to pay it off later, all I can say is patience is a very good virtue. The future can bring anything and it's best to be prepared

[safaiaryu]

Bothered that people my age are falling for this stuff. I've always felt BNPL loans were predatory and have never been tempted to use them. However, they really started to spread around the time that I was no longer living paycheck-to-paycheck... I bet if I had a low balance and needed groceries, or was interviewing for a job and needed interview clothes, it would have been a lot more tempting. As I said, predatory.

[tjbellah]

Heater of an intro. It’s pretty easy to see that financing everything is stupid, but they do have the most entertaining way of telling me that.

[thetruthhurts]

Phil is giving “Cut my life into pieces, this is my last resort” vibes 😂

[sentiencepsn]

To quote a classic SNL bit: don’t buy stuff you can’t afford.

[briankelly]

Credit cards also are no interest if you pay them off right away each time.

[megustAslagt]

In the Netherlands (a country with only slightly over half the population owning a credit card, and its usage even lower), they are looking into regulating these schemes quite thoroughly, as well as actively discouraging the usage for customers and the availability on the side of the retailers

[craigrwc]

I've only considered this for something where I had the money on hand to buy right away as well. I figured by using this sort of thing I could let the money sitting in a HISA grow just a tad more as I paid off the thing, but then I realized the pay structure of every 2 weeks made no difference compared to just using a cashback credit card and paying that balance in full on time like normal. These BNPLs just don't make sense, IMO

[baganatube]

I can see how it's so attractive to young people who are short on cash but have no shortage of wishful expectation of a brighter future. Budget wisely.

[inverness]

Watching this video, another modern trend came to mind. What do all of you think about entertainment companies moving towards a subscription model instead of offering goods for sale? A good example are video games. Instead of purchasing a physical or digital copy of a game, you are invited to subscribe to a service to play games. Once your cancel your subscription, you no longer have access to the game. Similar to renting over buying a house or streaming a movie instead of buying it.

[cdmsvt]

Wow! This video could've have come at a better time. I was just delivered my bed in a box after paying with BNPL. A month ago it was a new furniture set. I need to put an end to this now!
Thank you two cents! I literally thought the same! What's the advantage for the company if I pay off in time and pay 0 interest?! You have answered that for me!

[Badlex]

As someone who has defaulted on several BNPL loans due to unemployment taking more than two months to kick in and me not being able to catch up, heed the advice of this video. Great one, as always Two Cents.

[liquidsunnshine]

I moved across the country and had nothing to start over with. I did my best to find second hand items or otherwise source furniture and supplies I could afford. But it was in the pandemic and some things were hard to manage. I used BNPL for a couch and for a washing machine but was very very cautious and careful about making sure I paid it off on time and on schedule.

That said, they were incredibly useful when I needed them but definitely could be scary to get in the habit of using.

[justanotherjessica]

Buy Now Pay Later CAN be a valuable tool for financially savvy people but they definitely take advantage of the not-so-savvy and people who are struggling to make ends meet which is frustrating.

An example of how to leverage them is when you go to make a large purchase that you have already saved up for. Instead of paying in full up front, you can use buy now, pay later to get 0% interest and leave the money in your high yield savings account to accrue interest and just make payments. Depending on how long the repayment period is, you could earn a good chunk of interest. Of course, you should only attempt this if you are not going to be tempted to touch the money during the repayment period.

[soliloquylove]

The BNPL is definitely the HSN/QVC of our generation.

[DA-bmmj]

Also worth to mention that BNPL is still a loan but the interest is now included in the price by the seller, thus increasing the price.

[whatrtheodds]

I needed formal shoes for a wedding I'm attending. I was looking at these shoes. I love them. So so beautiful. They came up on a Facebook ad $ 160. Bnpl almost made me think I could afford it. With $40 in four installments. I had to slap my own self and remember how broke I am as a student and say no. If retailers are really willing to pay all these fees then I am fighting against perfected algorithms with tailored Facebook ads and tricky marketing ploys. My primate brain struggles to keep up.

[beckychristiansen]

I agree it’s silly to put everyday purchases on these plans. But One thing I like about something like “paypal pay in 4”is when I purchase a higher priced item. Like clothing/shoes or a household item — am not 100% certain it will fit or work for my situation. There’s a high probability that I will return it. So I only am out 25% of the purchase price and if I return it I don’t have to wait to get the whole amount back.