The dark side of Buy Now Pay Later apps

Think twice before using Buy Now Pay Later apps. (Timestamps below) There are no free lunches. Find out how expensive it is to offer (for a merchant), how that can increase prices, and how using other methods to pay might be better for you (and also for lower income households!)

NEW: See the follow up to this video for even more downsides to BNPL

00:00 What are "Buy Now, Pay Later" companies?
00:46 Example of a Buy Now Pay Later transaction
01:12 How do these services make money?
03:10 How much does it cost the retailer?
05:05 How lower income households subsidize richer households
08:30 Is using a regular credit card transaction better?
10:09 What's the ideal way to pay for discretionary expenses?
11:09 Delinquency rates for credit and Buy Now Pay Later
11:35 How much revenue do missed payments generate?

Resources and links mentioned in the video:
Credit Card Competition Tribunal in Canada:

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I've hosted a personal finance TV show on the Oprah Winfrey Network, used to be a stockbroker, went to school to become a racecar driver (failed), founded a fintech company that provides financial planning software to financial advisors who want to help more people who don't have lots of money, and I consult with wealth management companies on commercializing applications of behavioral economics/finance. I'm also quite fond of donuts.

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[JaBlanche]

I use this all the time. Bought my last TV like this and already paid it off. The thing is I can more than afford to pay the cost upfront, however, if I don't have to pay it, why wouldn't I? Leaves me extra money to invest. I wouldn't suggest doing this if you don't have the money or steady, guaranteed income. I do not miss payments. And just like a credit card or any debt....you get in trouble when you miss payments. If you're responsible, these are great deals.

[dabizzness]

I was able to buy xmas gifts with these apps. Whoever created these deserves an award. Thank you.

[shirleykean]

As a kid of the 80s we knew this as Layaway,

[PreetBanerjee]

Yes, those Buy Now Pay Later offers are indeed not a free lunch.
Timestamps:
00:00​ What are "Buy Now, Pay Later" companies?
00:46​ Example of a Buy Now Pay Later transaction
01:12​ How do these services make money?
03:10​ How much does it cost the retailer?
05:05​ How lower income households subsidize richer households
08:30​ Is using a regular credit card transaction better?
10:09​ What's the ideal way to pay for discretionary expenses?
11:09​ Delinquency rates for credit and Buy Now Pay Later
11:35​ How much revenue do missed payments generate?

[kshitijnair]

As a 22 yo who's just stepping into personal finance, I absolutely love the way you explained BNPL and compared it to everything with actual calculations. Amazing video, subscribed !

[marichrystina]

if my credit were solely based on my on-time payments on buy now pay later apps because i couldn't afford the whole price up front, i'd never be denied a thing- buy now pay later is wonderful

[CandyBunnyAngel]

Tbh if they wana take a small interest I say go ahead well deserved! These apps have allowed the working class and people struggling on benefits etc the opportunity to have nice things they deserve! In my eyes it’s a godsend to finally give the good people what they deserve to have.which is luxury <3

[chrisbolducrowan]

Nothing said in the video turned me off at all. I don’t spend money I can’t pay back. I don’t use this irresponsibly. I absolutely love it. Inflation and costs are getting out of control.

[reluctantlasvegan]

Yes. This is BS
I support buy now pay later
This helps consumers maximize their earning power. The Credit Card companies are not handing out credit. People are sentenced to prison shorter times than it takes to improve credit. These programs are a Godsend and I resent these programs being demonized.

[tanyaware]

I love them. Honestly I pay the amount before it's due based on my pay schedule so im always ahead of the payment or have it paid in full before the actual term. If you're working consistently and can afford the payment for the service break down, you're good to go.

[kionajames]

I have used everyone of these services for several purchases and I never have a problem at all, if you pay early or on time it doesn’t matter. If you’re not responsible enough to pay on time then you shouldn’t be doing monthly payments anyways.

[tomominatsu]

I wouldn't have been able to furnish my apartment with essentials without afterpay and klarna. I was never approved for any credit cards since I was young and just starting to build credit. Plus my bi-weekly paychecks made it impossible to pay rent, buy groceries, and also drop $100 on sheets and pillows and mattress cover all in one month. Never made sense to me why my parents, who already have everything they need, could be approved for thousands of $ worth of credit but I who worked full time couldn't sleep on sheets and eat in the same week

[anapitanga]

The problem with these services is that eventually things start to getting more expensive. They know that people might not pay $200 for a product, but if it's split in 4 or more payments, they might the $200 or even more.

[marcusssc]

For those that don’t understand. The bottom line of the video is that the more people use these apps, it’s going to drive the price of items higher bc it’s costing the seller money just to accept this for of payment. What you don’t see behind the scenes is that sellers are being charged to accept these apps, and what they’re going to do is simply increase the price of the item.

[barttfisher]

Its like the U.S. economy relies on ongoing credit and debt generation from consumers for sustenance. The Federal Reserve is expected to increase the money supply, leading to further debt accumulation for the average American. Meanwhile, foreign nations continue to desire the U.S. dollar, despite their own economies facing significant challenges, some even worse than that of the U.S. This situation raises concerns about who will ultimately bear the consequences of these economic dynamics.

[SlackersIndustry]

seems alright if u responsible and make ur first 4 payment, they make their money off the merchandiser. either way its great to have options you never know, just be responsible which most people will not

[deannacrownover]

If you're good with your finances, these are fantastic resources.
They report to the credit agencies and allow you the item up front.
It's like rent-a-center for "other than home" items.
If you don't have a steady income, stay away from these resources.

[vladislavkaras]

Huh... I did not know how it would affect the merchant!
Thanks for the video!

[JoiCarlaBodyBar]

I'm sorry, these Apps have helped me in such a hard time as this. I don't have the luxury to always pay upfront. 🤷

[musicased]

It is shady that they basically target people who won't pay on time by incentivizing them to do a payment plan for something they already can't afford but it's nice for the people who have the money/income to make payments on time every time.