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I can sort of understand using BNPL for seasonal purchases like Christmas gifts, to spread the payments over time. But using them to pay for utilities or rent s

I can sort of understand using BNPL for seasonal purchases like Christmas gifts, to spread the payments over time. But using them to pay for utilities or rent seems like a colossally bad idea. In general, I don't favor regulation of loan products, on the notion that people should be free to get loans that fit their circumstances. But I wouldn't be opposed to limiting BNPL loans so they are not available for purchases that are (1) large dollar value and (2) recurring. Or there could be PSAs to warn people about them. And regardless, they should be teaching kids about money management and the consequences of BNPL in school. There should be plenty of time now that kids aren't learning about "balancing their checkbook".

graceful6800 2mo ago
Saying "people should be free to get loans that fit their circumstances" implies a level of financial literacy that simply does not exist in this country. You and I might be able to make educated judgments about a loan and its value/consequences, but the vast majority of Americans cannot. We simply don't teach this kind of thing in our schools, and every day innocent people get absolutely taken advantage of. If the public were capable of accurately judging the utility/risk of a loan, then sure we can say it should be on the individual to make their own choices. But that is just not the reality we live in.
- apparent 2mo ago
  I respect that position, and you're right that not everyone is smart enough to make good choices for themselves. I don't carry a balance on my credit cards, which makes me somewhat smart, but I also don't follow all the subreddits about maximixing credit card points, moving balances from here to there, etc. Some people might look down on me for "leaving money on the table" in that regard. I could probably make a thousand dollars a year if I were more informed/aggressive. I don't want to look down my nose at people who make decisions that I wouldn't make. They also face very different circumstances. What if someone needs to pay for an unexpected medical bill (which they cannot BNPL) and needs to choose between that and rent? What might look like a dumb choice from the outside might be an exercise in constrained optimization. I've said that I'm open to BNPL being unavailable for certain transaction types, but I wonder if someone with your opinions would rather have them outlawed entirely?
  - joshfee 2mo ago
    I see both sides of this argument and am really not sure which side I land on. But I wonder if this fits into things like driving, where hey - done recklessly this is dangerous to yourself and others around you, so we require some level of targeted education (e.g. a license). Then if you choose to be reckless anyway its a bit easier to say "it was your own fault". I bet you credit providers would even front the cost of such a course, since at the end of the day they're still likely to make that money back no matter what. I think the part that I struggle with is the hard reality that we are largely _not_ teaching people these practical skills in our education system and then expecting them to not get screwed.
    - apparent 2mo ago
      In my mind, the externalities of reckless driving are much greater than getting credit on bad terms.
      - Tadpole9181 2mo ago
        Until, of course, tens of millions of people are taking BNPL loans with 20% interest rates willy nilly. Then when they default, it triggers an economic crisis that affects every single person in the country.
- cucumber3732842 2mo ago
  >" implies a level of financial literacy that simply does not exist in this country. Yeah I get it, looking down your nose at the "median american" is popular in certain filter bubbles. Everyone getting a short term loan product knows it's a bad idea. They either fall into the category of "I can afford to finance a taxi for my burrito even if it's stupid" or "I know this is unsustainable but if I don't pay for X then Y then Z will happen and that is a guaranteed bad outcome whereas this at least gives me a chance of a good outcome".
  - FireBeyond 2mo ago
    There is an element of truth to what you say, but I also think you're being dismissive. It _doesn't_ exist today. For one simple example: how many times have you heard people talk about payraises etc., "bumping me into a higher tax bracket so I actually lose money"? I've probably explained it dozens of times to people I consider entirely intelligent - many of them believe there's this little window at the border of each taxation tier that makes no sense to be in.
  - graceful6800 2mo ago
    Be careful of who is looking down their nose at whom because my words come from having personally bailed out people who genuinely did not have the capacity to make sound financial judgements. I'm not making judgments of the people you're speaking down about, I'm making judgements of a nation utterly failing to prepare its citizens for the financial realities of our world. It's not a personal failing for hundreds of millions of people to be financially illiterate, it's a failure of society and those elites who like to gaze down at the dirty peasants for not knowing better.
    - hydrogen7800 2mo ago
      Many forget that the other side of the "personal responsibility" coin is "social responsibility". Often the ones invoking the former can't even conceive of the latter.
      - TitaRusell 2mo ago
netsharc 2mo ago
> But using them to pay for utilities or rent seems like a colossally bad idea. You_Dont_Say.gif As the article mentions, these are probably people who don't have the money in their bank accounts to pay for those things straight away. Frakk, even at a sane repayment terms (e.g. fixed interest monthly, no steep penalties), it's an interesting way for finance companies to profit from the misery of the leg of the K in the K-shaped economy.
- butvacuum 2mo ago
  literally anything that's better than paycheck advance ursery is a win.
  - cucumber3732842 2mo ago
    The next best option is something like begging your friend/relative for the money they were gonna use for rent. None of the options in these situations are good.
  - gruez 2mo ago
    You can use the same to argue for "paycheck advance ursery", because the alternative to that is borrowing from the mob, or not borrowing anything at all and being thrown on the streets.
    - lcnPylGDnU4H9OF 2mo ago
      Another alternative could be implementing reasonable and toothy checks on corporate malfeasance like price fixing, rent-seeking, wage theft, and wage suppression such that the lower class can actually afford to live in society.
      - brookst 2mo ago
        But is that really an alternative? Same resources, same effort to implement? I’m all for major reform, but I am suspicious of “instead of the small fix, do the big fix”.
Karrot_Kream 2mo ago
> In general, I don't favor regulation of loan products, on the notion that people should be free to get loans that fit their circumstances. But I wouldn't be opposed to limiting BNPL loans so they are not available for purchases that are (1) large dollar value and (2) recurring. Or there could be PSAs to warn people about them. Wouldn't general usury laws be able to handle this? I suspect BNPL loans for 1 and 2 would generally involve ruinously high interest rates to account for risk, so as long as there's a cap on consumer-facing loan rates that should limit the risk for BNPL offerings.

graceful6800 2mo ago

Saying "people should be free to get loans that fit their circumstances" implies a level of financial literacy that simply does not exist in this country. You and I might be able to make educated judgments about a loan and its value/consequences, but the vast majority of Americans cannot. We simply don't teach this kind of thing in our schools, and every day innocent people get absolutely taken advantage of. If the public were capable of accurately judging the utility/risk of a loan, then sure we can say it should be on the individual to make their own choices. But that is just not the reality we live in.

apparent 2mo ago
I respect that position, and you're right that not everyone is smart enough to make good choices for themselves. I don't carry a balance on my credit cards, which makes me somewhat smart, but I also don't follow all the subreddits about maximixing credit card points, moving balances from here to there, etc. Some people might look down on me for "leaving money on the table" in that regard. I could probably make a thousand dollars a year if I were more informed/aggressive. I don't want to look down my nose at people who make decisions that I wouldn't make. They also face very different circumstances. What if someone needs to pay for an unexpected medical bill (which they cannot BNPL) and needs to choose between that and rent? What might look like a dumb choice from the outside might be an exercise in constrained optimization. I've said that I'm open to BNPL being unavailable for certain transaction types, but I wonder if someone with your opinions would rather have them outlawed entirely?
- joshfee 2mo ago
  I see both sides of this argument and am really not sure which side I land on. But I wonder if this fits into things like driving, where hey - done recklessly this is dangerous to yourself and others around you, so we require some level of targeted education (e.g. a license). Then if you choose to be reckless anyway its a bit easier to say "it was your own fault". I bet you credit providers would even front the cost of such a course, since at the end of the day they're still likely to make that money back no matter what. I think the part that I struggle with is the hard reality that we are largely _not_ teaching people these practical skills in our education system and then expecting them to not get screwed.
  - apparent 2mo ago
    In my mind, the externalities of reckless driving are much greater than getting credit on bad terms.
    - Tadpole9181 2mo ago
      Until, of course, tens of millions of people are taking BNPL loans with 20% interest rates willy nilly. Then when they default, it triggers an economic crisis that affects every single person in the country.
cucumber3732842 2mo ago
>" implies a level of financial literacy that simply does not exist in this country. Yeah I get it, looking down your nose at the "median american" is popular in certain filter bubbles. Everyone getting a short term loan product knows it's a bad idea. They either fall into the category of "I can afford to finance a taxi for my burrito even if it's stupid" or "I know this is unsustainable but if I don't pay for X then Y then Z will happen and that is a guaranteed bad outcome whereas this at least gives me a chance of a good outcome".
- FireBeyond 2mo ago
  There is an element of truth to what you say, but I also think you're being dismissive. It _doesn't_ exist today. For one simple example: how many times have you heard people talk about payraises etc., "bumping me into a higher tax bracket so I actually lose money"? I've probably explained it dozens of times to people I consider entirely intelligent - many of them believe there's this little window at the border of each taxation tier that makes no sense to be in.
- graceful6800 2mo ago
  Be careful of who is looking down their nose at whom because my words come from having personally bailed out people who genuinely did not have the capacity to make sound financial judgements. I'm not making judgments of the people you're speaking down about, I'm making judgements of a nation utterly failing to prepare its citizens for the financial realities of our world. It's not a personal failing for hundreds of millions of people to be financially illiterate, it's a failure of society and those elites who like to gaze down at the dirty peasants for not knowing better.
  - hydrogen7800 2mo ago
    Many forget that the other side of the "personal responsibility" coin is "social responsibility". Often the ones invoking the former can't even conceive of the latter.
    - TitaRusell 2mo ago

netsharc 2mo ago

> But using them to pay for utilities or rent seems like a colossally bad idea. You_Dont_Say.gif As the article mentions, these are probably people who don't have the money in their bank accounts to pay for those things straight away. Frakk, even at a sane repayment terms (e.g. fixed interest monthly, no steep penalties), it's an interesting way for finance companies to profit from the misery of the leg of the K in the K-shaped economy.

butvacuum 2mo ago
literally anything that's better than paycheck advance ursery is a win.
- cucumber3732842 2mo ago
  The next best option is something like begging your friend/relative for the money they were gonna use for rent. None of the options in these situations are good.
- gruez 2mo ago
  You can use the same to argue for "paycheck advance ursery", because the alternative to that is borrowing from the mob, or not borrowing anything at all and being thrown on the streets.
  - lcnPylGDnU4H9OF 2mo ago
    Another alternative could be implementing reasonable and toothy checks on corporate malfeasance like price fixing, rent-seeking, wage theft, and wage suppression such that the lower class can actually afford to live in society.
    - brookst 2mo ago
      But is that really an alternative? Same resources, same effort to implement? I’m all for major reform, but I am suspicious of “instead of the small fix, do the big fix”.

Karrot_Kream 2mo ago

> In general, I don't favor regulation of loan products, on the notion that people should be free to get loans that fit their circumstances. But I wouldn't be opposed to limiting BNPL loans so they are not available for purchases that are (1) large dollar value and (2) recurring. Or there could be PSAs to warn people about them. Wouldn't general usury laws be able to handle this? I suspect BNPL loans for 1 and 2 would generally involve ruinously high interest rates to account for risk, so as long as there's a cap on consumer-facing loan rates that should limit the risk for BNPL offerings.