Reads like thinly veiled advertising for the services offered by the website this article comes from. I doubt it's anywhere close to a representative sample.
this post was submitted on 02 Jun 2024
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What services by the way?
I tried looking and it seems the company that owns the website is basically an Ad company that got bought out by a different SEO and Ad company that's owned by Matt Buchanan and Jesse Biter who originally focused on car sales.
Seems it's more just an in industry plant site meant to just be a place for people who like to make money to talk about money things that can have articles they can point to, to back their statements but that's it.
"Pay later plans"? Other than credit cards, WTF are you talking about?
Yeah, I have a credit card that pays me back 5% cash on grocery store purchases. It would be stupid NOT to use it, then I pay the card off every pay day.
Groceries + free money.
They’re talking about installment plans through your credit card. You pay a fee to split a charge into monthly installments, usually of your choosing. By paying the monthly installment and the rest of your balance from other charges, you can avoid interest kicking in, even while you owe the full amount. The fee is usually a % of the purchase, like 3% or 1% per month or something.
It can make sense on a large one-time purchase, but it’s weird to do it for frequent purchases like groceries.
My last trip to the grocery store was $600.
I'd consider that a large purchase.
I agree it is, but if you spend that amount regularly, it’d be better to try to reduce your budget, painful as it may be, than to snowball toward ever-increasing payment obligations that match or surpass your monthly total for grocery trips anyway.
These articles make it seem like it’s a routine. If it’s for one-time temporary relief, then that’s another thing.
It wasn't, and never will be, for me. However, I didn't go crazy getting things I don't need. I went out of my way to get the cheaper option on the vast majority of items. Still $600. That's at least once a month. I can see why those less fortunate would have a hard time.
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They could also be talking about Affirm/Klarna/Afterpay. I've seen those advertised as being able to use them that way.
Edit: looking back, that might be the most awkward sentence I've ever written. I shouldn't get on here while I'm drinking.
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I don't think this article is about you
No, but as someone who, you know, buys groceries on the regular, I've never seen the sort of payment plan they're talking about.
Yeah, my Amazon card has that option, so does PayPal, but I haven't seen a grocery store that takes PayPal.
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Yeah, I have a credit card that pays me back 5% cash on grocery store purchases. It would be stupid NOT to use it
Groceries + free money.
I'm reading this as a European and have questions... We all know that there is non free money. So, what's the business model? Making you use the card more by giving you "free" money and making the shops pay more to use the payment service, so that the shops then increase the prices, so that you pay the same as before (considering increased prices and cashback), but are now using the payment system a lot more?
Few tricks.
- Card services actually get a small fee per transaction from the retailer so they just get paid every time you use their card which can add up.
- If you fail to pay off the balance for any reason they can charge generally a 20%+ compounding interest that for most people is probably closer to 27-30% and quickly replaces the minimal cash back.
- Spending habits and ability to sell the data to other card/loan providers and advertisers can help generate additional revenue. Think maybe you consider them trustworthy and they offer a car loan for $30,000 and you take it happily without looking around to find out they have a much higher interest rate on it and they get an extra couple grand from you.
Interest rates if you don't pay off the full amount
making the shops pay more to use the payment service, so that the shops then increase the prices, so that you pay the same as before
Just nitpicking because I enjoy these thoughts:
When the shop increases prices, it has to do it for all the customers, including the ones without credit card. So a part of the cost is offloaded to other types of customers. While credit card customers should see a slight increase in price, it should not be as much as they saved previously. So still a net win for them, at the cost of others.
As others pointed out, the real scheme is probably entirely different.
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Credit card companies make money off selling your spending habits to information brokers.
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Klarna etc. It's like a credit card but for people who aren't allowed credit cards, and it doesn't show up on your credit reports.
Which is a terrible idea. Lending limits are so you don't get in over your head, they're not some scam to keep poor people poor. Poor people are already poor. Corporations would cheerfully lend to you until you can pay no more, and then sell you for parts.
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I had to deal with food insecurity when I was a young adult. This was around the turn of century. More than once I wrote checks I could not cover, hoping to get cash in the bank before it cleared. And I had to eat overdraft fees I obviously couldn't afford as a result.
This isn't so different in that not having enough money ends up costing more. And with wage disparity and food costs being what they are now, it's easy to believe that percentage, unfortunately.
Side note: man I'm super old :(
"Turn of the century" and immediately think of 1900... And I'm like oh wait 2000 is a turn of the century.
I see this so much from my coworkers. I could never. I'd rather do without or just steal if I really need something. Credit like that is a trap. I learned that from growing up poor. I'm 36 and debt free and I'm not going back. I'm not buying every day things on credit. I can wait a few paychecks if I need to.
it's scary. I work in IT and many gen Z kids leave their personal financial stuff on work computers...
the spending/debt they are in is nuts... and it's stupid stupid debt. one kid had $10,000 in credit card debt over 6 months of spending and was making like $100 payments on $1000s per month in spending. the spend like they make $250K a year even though they make 40K. he's probably 23-25.
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90% of everyone else does too. **With credit cards. **
I mean responsible card owners pay their statement in full every month. It's a great way to get purchase protection and cash back or reward miles. This is more like splitting payments over multiple months, and if you do that with a credit card APR you're getting a terrible bargain.
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One issue is that credit card spending is tracked as consumer debt, but these schemes largely aren't, so the rosy economic picture that has been painted by official numbers could be undermined by these hidden numbers.
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Betting on the collapse of civilization… I get it.
Haha… If the us collapses by next Friday, I got my groceries half off.
Oh fuck.
Whenever possible, try to avoid shit like this. Credit cards and major loans too. I'm trying to avoid this until I need a loan for a house or some shit.
Credit cards are fine as long as you pay the balance every month. You even get some small perks and it's easier to balance your budget (at least for me it is). I'm not sure how buy now pay later schemes work as I've never used one of those services. Does it tack on a fee or is there interest involved automatically? They obviously are gonna rake you over the coals for being late, but credit cards do the same thing if you don't pay the balance.
In my experience it's also easier to dispute a credit card charge vs a debit charge. Also this might just be in North America but using a credit card also builds your credit score/history which is necessary down the line for things like loans or even to rent an apartment.
And your bank account isn't directly tied to a credit card, unlike a debit card. I've heard horror stories about people that have a $2k disputed charge that is just in limbo in a bank account until the investigation is complete and found in the account holder's favor.
Credit card companies actively pursue fraud and will advocate for their cardmembers first, whereas the banks seem to hold some apprehension; at least in my experience.
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Why pay now when I don't even know if I'll still be alive next week?
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