Blog #2 How FUCKED (and addicting) is "Buy Now Pay Later" ?

It's 10pm on a Sunday night, you are in your bathroom shaving your head and listening to tunes... as you do. When all of a sudden you see a 50% off sale pop up on instagram. Now you don't have money, no baller ever shaved their own head. But that doesn't matter despite how low -or non existent- your bank balance is you fill up your cart and keep browsing. Now 5-10 years ago unless I had a credit card -I've been denied twice- I would have to leave my cart full and simply hope I got paid before the sale ended. But thankfully for my wardrobe we are in 2024 the year of consumer debt

Afterpay, Zip Pay, Klarna, are all ready to make you feel like you have money when you really don't. The platforms allow you to pay for one quarter of cost of the purchase up front and stagnates the remaining payments over a 6 week to 2 month period. Or in the case of zip they have essentially given me a credit card with a $500 limit that I can use in almost any Brick and Morter store. As well as another $2000 I can use online.

These platforms can be super helpful at times, especially for young people. When your first out of home it can be risky and even straight up difficult to get a credit card which can be extremely helpful if your ever in a bind. Buy now pay later offers an accessible and seemingly risk free alternative.

The problem is that just like a credit card it is very easy to get carried away with these platforms and the repayments can slowly kill you. Unlike credit cards however these platforms do not get you with the interest they are largely interest free. Another fantastic way to pull young people in. These platforms largely make their money on the retailer side by earning a commission on sales made through their platforms. Zip does takes a $10 monthly fee whenever you are indebted to them.

Once you make a purchase with these platforms you are signed up to regular repayments until the item is paid off. Now these platforms do allow you to repay the full item early so you can be prudent. But let's be honest, most people using buy now pay later probably cannot pay off their items early. The regular repayments on these platforms can really stack up. This is partially because unlike credit cards they do not consolidate your debt. These platforms treat each purchase as a separate line of debt which you repay on regular payments starting from the day of purchase.

This results in these platforms killing you with a thousands cuts compared to the more upfront approach taken by credit cards.

One summer I was in a depression era bed rotting and ordering meatboxes and I discovered that you can use buy now on doordash and uber eats. This was a dangerous discovery. each time I pondered ordering another price no longer scared me. I was not looking at $30 I was looking at $7.50. I didn't feel the damage right away but it arrived slowly. Eventually it reached the point where everyday I had a payment hit my account for a late night meat box buy.

Food delivery is just one of the questionable things you can use buy now pay later for. Zip Pay and the virtual card it gives me on my phone has surprised me on many occasions. I've bought alcohol with it and I've even visited the boys down at Murray Street convenience and had no problem using zip. Everytime I've thought to myself "surely they wont let me use zip here" I'm surprised.

You may be thinking "why does it matter that you can use these services anywhere just make good financial decisions". I somewhat agree, yes the choice is ultimately up to the spender. However, these services have the potential to do some serious damage to your expenses and with the current cost of living crisis people are having to enter debt to even buy groceries. Ultimately it is the large corporations to blame and a sobering reminder that none of them from the major retailers to the buy now pay later providers have your best interest at heart.

I've had points where I've maxed out all my buy now pay later accounts and had to do some serious moves to get my finances back in order. It’s not easy trying to survive financially at the moment. Getting smacked in the face with a buy now pay later notification only makes things more difficult and is a lesson in self control.

I still sometimes use these services as I'm sure you can tell but I've definitely changed my approach. I'm a lot more cautious and much less likely to make stupid purchases... including meatboxes.