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".
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 it's 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.
>" 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".
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.
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.
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.
Maybe you were lucky to be raised into financial literacy and only circulate around other people who have, and so can only imagine -- with charity -- what other people must be thinking when they take loans.
But others here have been truly naive themselves or have journeyed with intimacy and openness beside a parent, partner, or friend who really just doesn't get it.
The reality is that there are a lot and lots and lots of real people in the real world who sincerelt just don't understand the terms they're agreeing to, how their own finances work, what's plausible in their own financial future (near or long term), etc -- and the companies the design and promote convenience loans know this and they target these people like sharks hunting prey.
They use any and every trick they can get away with to lure these naive people into agreements for which all outcomes (payment or default) favor the shark.
Without regulation of both loan design and presentation, lending naturally become a vehicle usury, vaccuuming assets and opportunity from the many earnet people who will always be too credulous, too trusting, too naive, or too desperate to resist.
> 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.
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.
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.
I see no path for how this could/would happen that doesn't wind up with BigCo saying "our obvious evil is complaint because lawyers and engineers and experts we paid off say X Y Z" and any medium or small business that could ever threaten them gets screwed status quo that we currently see with every other area of compliance.
> 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.
There’s something in that about the nature of predators - you don’t actually get mad at the wolf for eating the chicken, it’s what the wolf does, just like eating the worm is what the chicken does and eating your garden fruit is what the deer do. You don’t get mad at the wolf, you either build a fence or you kill the wolf.
Banks varied in their philosophy of interest rates, minimum monthly payments, and so on. None of that mattered to Bud. What mattered was what they would do to him if he got into arrears, and so after he had allowed a decent interval to pass pretending to listen very carefully to all this crap about interest rates, he inquired, in an offhanded way, like it was an afterthought, about their collection policy. The banker glanced out the window like he hadn't noticed.
The soundtrack segued into some kind of a cool jazz number and a scene of a multicultural crew of ladies and gentlemen, not looking much like degraded credit abusers at all, sitting around a table assembling chunky pieces of ethnic jewelry by hand. They were having a good time too, sipping tea and exchanging lively banter. Sipping too much tea, to Bud's suspicious eye, so opaque to so many things yet so keen to the tactics of media manipulation. They were making rather a big deal out of the tea.
He noted with approval that they were wearing normal clothes, not uniforms, and that men and women were allowed to mingle. "Peacock Bank supports a global network of clean, safe, and commodious workhouses, so if unforeseen circumstances should befall you during our relationship, or if you should inadvertently anticipate your means, you can rely on being housed close to home while you and the bank resolve any difficulties. Inmates in Peacock Bank workhouses enjoy private beds and in some cases private rooms. Naturally your children can remain with you for the duration of your visit. Working conditions are among the best in the industry, and the high added-value content of our folk jewelry operation means that, no matter the extent of your difficulties, your situation will be happily resolved in practically no time."
"What's the, uh, strategy for making sure people actually, you know, show up when they're supposed to show up?" Bud said. At this point the banker lost interest in the proceedings, straightened up, strolled around his desk, and sat down, staring out the window across the water toward Pudong and Shanghai. "That detail is not covered in the brochure," he said, "as most of our prospective customers do not share your diligent attention to detail insofar as that aspect of the arrangement is concerned."
He exhaled through his nose, like a man eager not to smell something, and adjusted his goatee one time. "The enforcement regime consists of three phases. We have pleasant names for them, of course, but you might think of them, respectively, as: one, a polite reminder; two, well in excess of your pain threshold; three, spectacularly fatal."
Bud thought about showing this Parsi the meaning of fatal right then and there, but as a bank, the guy probably had pretty good security. Besides, it was pretty standard policy, and Bud was actually kind of glad the guy'd given it to him straight. "Okay, well, I'll get back to you," he said. "Mind if I keep the brochure?"
The Parsi waved him and the brochure away. Bud took to the streets again in search of cash on easier terms.
Then everything includes itself in power,
Power into will, will into appetite;
And appetite, a universal wolf,
So doubly seconded with will and usury,
Must make perforce a universal prey,
And last eat up himself.
For a while, I volunteered with a social services agency that had a deal with the power company where we could directly cover electric bills for people who were in danger of being disconnected. Nobody wants to lose their electrical power; in the desert it's kind of essential to keep the A/C and refrigerator going.
I got a dismal bird's eye view of the situation. In order to help anyone, we were required to collect various types of information from them. Any financial help is usually subject to a lot of paperwork and a lot of disclosure. Many people are reluctant/uncomfortable with this kind of scrutiny, especially if they are living in the shadows for any reason.
So my job on this side involved going down our list, and telephoning each household to try and get that information from them. I didn't work on this long, but very diligently I tell you, and I kid you not, I had a 99% failure rate. I was calling during the work hours of the weekdays, and we could practically never reach anyone at home. And that is totally understandable, if you were up against indigent people trying to save their household, and consider they were either at work, looking for work, or traveling around trying to get this kind of assistance in person.
Sadly in 2026, I would say that more people than ever before are leaning on social services to get the food they need, and pay their rent/utilities, because it's totally obvious that many families are failing in this regard, being displaced, and the homeless/on-the-streets population is still growing. Therefore I am unsurprised that BNPL and payday or title loan schemes are putting people into debt this way.
It was dismaying to me that charitable help was being offered but unattainable, due to simple missed phone calls.
I recently saw a video named "I Took a Millionaire Inside a Homeless Man’s Life" on YT and I was shocked that in the richest country of the world people can be so poor. If that veteran with health issues served a poorer country like Finland, he would probably be living in a government-paid apartment and not in the street.
At its peak powers, the CFPB aggressively regulated payday lenders.
Before someone argues about free markets, the CFPB also helped remove long outstanding medical debts below $500 out of consumer reports helping an estimated 23M American consumers - a perfect example of increase regulations on the bad, increase access for the poor.
29 comments
[ 0.21 ms ] story [ 11.0 ms ] threadIn 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".
You and it's 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.
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".
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.
Every nation has poor folks. Capitalism demands it. In my country the government gives them up to 20k per year in housing benefits and relief.
But others here have been truly naive themselves or have journeyed with intimacy and openness beside a parent, partner, or friend who really just doesn't get it.
The reality is that there are a lot and lots and lots of real people in the real world who sincerelt just don't understand the terms they're agreeing to, how their own finances work, what's plausible in their own financial future (near or long term), etc -- and the companies the design and promote convenience loans know this and they target these people like sharks hunting prey.
They use any and every trick they can get away with to lure these naive people into agreements for which all outcomes (payment or default) favor the shark.
Without regulation of both loan design and presentation, lending naturally become a vehicle usury, vaccuuming assets and opportunity from the many earnet people who will always be too credulous, too trusting, too naive, or too desperate to resist.
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.
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.
(And also, though I don't begrudge them much, also, a special hell for those who offer this up to companies for a cut).
https://fred.stlouisfed.org/series/MEHOINUSA672N
I got a dismal bird's eye view of the situation. In order to help anyone, we were required to collect various types of information from them. Any financial help is usually subject to a lot of paperwork and a lot of disclosure. Many people are reluctant/uncomfortable with this kind of scrutiny, especially if they are living in the shadows for any reason.
So my job on this side involved going down our list, and telephoning each household to try and get that information from them. I didn't work on this long, but very diligently I tell you, and I kid you not, I had a 99% failure rate. I was calling during the work hours of the weekdays, and we could practically never reach anyone at home. And that is totally understandable, if you were up against indigent people trying to save their household, and consider they were either at work, looking for work, or traveling around trying to get this kind of assistance in person.
Sadly in 2026, I would say that more people than ever before are leaning on social services to get the food they need, and pay their rent/utilities, because it's totally obvious that many families are failing in this regard, being displaced, and the homeless/on-the-streets population is still growing. Therefore I am unsurprised that BNPL and payday or title loan schemes are putting people into debt this way.
It was dismaying to me that charitable help was being offered but unattainable, due to simple missed phone calls.
Before someone argues about free markets, the CFPB also helped remove long outstanding medical debts below $500 out of consumer reports helping an estimated 23M American consumers - a perfect example of increase regulations on the bad, increase access for the poor.