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Status Items Output None Questions None Claims None Highlights Done See section below
Highlights
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In a 2023 report, the Consumer Financial Protection Bureau wrote that buy now, pay later users were more likely “to be highly indebted,” to “have delinquencies in traditional credit products,” and to exhibit “high levels of financial distress.”
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According to the New York Federal Reserve Bank, the nation’s collective credit card debt hit a record $1.17 trillion last month. As Rust put it, “If people are maxed out on their cards — and it appears the whole country is maxed out on its cards — it’s not surprising that the next resort is to jump to buy now, pay later.”
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Buy now, pay later providers primarily make their money by charging vendors a percentage of every sales transaction, one that’s usually higher than the similar fees that credit card companies charge. (Vendors are willing to pay because, when offered buy now, pay later options, consumers tend to spend more). If these payment plans are paid back on time, there are no interest charges on most of the loans.
✏️ How they make money technically.. But also late fees 🔗 View Highlight
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charge late fees, some as high as 25 percent of the total of the loan. That means even if you’ve paid off the majority of your debt, if you’re late on your final payment, you could end up with a charge equal to what you have left to pay.
✏️ One of the rubs 🔗 View Highlight
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on Reddit, a poster wrote, “Honestly BNPL is why I am in such a huge financial rut, they are addicting to use but man they are really hurting me financially.”
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one respondent called it a “credit trap — it encourages more spending and over spending [sic] and can easily lead you into more debt than you need.”