“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.
How many people for how long does that feed? Unless you want to starve on ramen noodles every day or eat only rice, I too don’t see how you’re getting away with less than $100/week per person.
That’s a month for two people.
What kind of psychopath only goes to the grocery store once a month?
🙋
How does your produce last that long
Most groceries only have a shelf life of about a week.
So if you’re only going once a month, either you’re throwing a lot away, or just getting processed, shelf stable stuff that’s in general low on nutrients and overpriced.
We spend the same amount for 3 people, 1 is vegetarian. It definitely buys enough meat, veggies, baking supplies and snacks for the kid. No pasta helpers, frozen foods, cookies (make our own), alcohol/soda. No ultra-processed stuff, just a variety of healthy ingredients with spices for each meal.
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.
I can choose with my credit card to designate a purchase over 100 bucks as a pay over time purchase. I don’t use it for anything less than 4 digits, but this year we got hammered by 4 4-digit car repairs, a 4-digit tree removal, two surgeries for our dog, and a few other unexpected big expenses. I used it for the car repairs and the dog surgeries because there was a promotion where there was no fee, it just raises the minimum monthly payment, and brought the interest down. I didn’t have the cash to pay that many things off at once so I’m using to to pay them down that way at a lower rate.
But you are absolutely right, using pay later plans for small frequent purchases is not great. They might not have a choice though.
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.
Aldi in the US always gives me the option at checkout to pay later, I’ve never explored it to find out the fine print
Walmart offers it too. They really are pushing the app lately too which offers a few companies so you can max out one and use another.
I haven’t either but knowing how greedy companies can be, I wouldn’t be surprised if it was offered somewhere.
As someone who trashed my credit the moment I turned 18, this whole article is bizarre to me. I’m in my 30s now and I still have to pay for (nearly) everything, up front, in full (even cars). I can only use private landlords because no apartment community will approve me. If I can’t afford something, I can’t buy it. Amazon is the only entity that trusts me with a payment plan, because they’re the only ones who don’t check your credit score. As long as you pay on time, they don’t care; so I always have. That’s the only reason why I could afford a TV.
I ended up ranting a bit so feel free to ignore this comment 🫣
It’s so shitty too because even if you spent years or even decades paying your bills on time, if you hit a few hard months you are completely fucked. None of these companies, not the government, not even the community gives a shit. Everyone just tells you to apply for food stamps, go to a food bank, apply for section 8, etc etc, without realizing that (at least where I am) they actively vote for and support policies that prevent most people from accessing those things. Not to mention food banks have so much moldy shit it’s not worth standing in line for 5+ hours to get nothing edible and then have to go to a different place next week because god forbid you go to the same food bank twice in a month. And then section 8… So many places their waitlists are closed for 10-20 years! If you get accepted during that time you still have to apply, find a participating landlord, and jump through 5,000 hoops before you can even plan to move in somewhere. And don’t get me started on healthcare!
My ex destroyed my credit back in 2009. My credit score was in the mid 500s. Fortunately, even though it took a decade, I was able to recover my credit and get it back into the 800s.
Jeez 800s is kind of an amazing bounce back. Good on you!! That took effort for sure.
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.
A lot of smaller businesses charge you extra for using the credit card or something similar.
The bigger businesses don’t do that.
Of course the bigger businesses do. it’s rolled into operating costs and is reflected in their pricing.
You just don’t end up with a different price differentiated by the transaction method.
Credit card companies make money off selling your spending habits to information brokers.
The business model is depending on card users accumulating interest. So they give you perks to get you to use the card and enough people won’t pay it off every month that they’ll make all their money back and more.
pays me 5% cashback
“I pay 5% extra on my groceries so some billionaire can hand it back to me later and tell me to be grateful for it”
Lol
Where did the extra 5% come from?
We are talking about businesses, right? They want to maximize profits, not giving money away for free… One dollar given away for free is one dollar less for the share holders. And for them, that’s pretty much the worst case.
The credit card company gives you 5% money.
Now, the credit card company has a problem. It loses money.
The credit card company has an idea: Why not making the real customer (the shop) pay more? Prices for shops to use the payment method rise now.
Now, the shop has a problem. It’s losing money and they think: What can we do? They rise the prices of the items they are selling. And who pays the higher prices in the end? You. And you think, you made a good deal.
The credit card company isn’t losing money because it’s already determined that giving people cash back won’t outweigh the interest and fees etc. that they’re really making money from. They use incentive programs to lure people in, hoping they won’t be able to pay off their balance each month. Those who can are basically getting discounts from the cash back program.
I’ve wondered about this for a long time. But I’ll never know for sure. Don’t know if overall I’m paying more, or a little bit less, with the cashback.
All I know for certain is that, overall, the credit card companies aren’t losing money.
If you think that, you’re exactly the kind of fool the credit card companies prey on
Yeah I’m such a fool for paying off my card balance every month and taking advantage of cash back programs. I should be smarter and pay with cash so it costs me more.
Well if the business is raising its prices on all products because of card processers then you would be the fool paying for it without getting the 5% back.
They get their money mostly from interest rates and other means. It doesn’t mean stores don’t occasionally raise prices because of processing fees but that’s not part of some grand conspiracy.
Or you know,live in any other country where they didn’t have to do that because people aren’t buttoned up the back
There’s a good reason credit cards aren’t popular in other countries
They’re not daft enough to fall for it 😂
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.
Klarna does appear on credit reports, at least here in Australia.
There’s two forms.
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Some banks offer to split payments on debit purchases after you make the purchase.
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Some stores (mostly online) offer it at checkout.
There’s no credit checks, and it’s easy for the buyer to not realize what’s happening.
Every single time you do it, a 3rd party company opens a line of credit for it.
It’s like getting a new credit card every time it’s used. Which demolishes peoples credit before they realize what’s going on.
But there’s rarely interest if paid on time, so people just don’t understand the damage they’re doing.
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Imagine using Sezzle for groceries. I doubt they are doing it out of necessity and probably out of just ease of use imo.
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.
I’d rather do without or just steal if I really need something.
Think of Pay Later as stealing on lay-away.
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.
I just got a credit card to build credit. I’ve never had a loan or card prior to this. The whole thing is so gross.
I hate to get biblical but I’m reminded of the story Jesus fucking up those finance bros with a rake. Shit stays the same apparently. 2k years on and it’s the same shit. I’m not religious AT ALL but if Jesus did come back and immediately started beating wall Street bros about the head and face with landscaping tools…
I was told to carry a small balance to improve my credit and it works.
*Claim it’s a myth but I saw an improvement from paying off my balance every month. My broker told me to do it in advance of applying for a mortgage, I did try to fact check him but couldn’t find anything definitive one way or the other. When it came down to it though, my score improved by changing literally only that.
Common myth. You do not need to pay interest ever to have good credit. Your accounts should show activity, ie your balance on your statement should be non-zero, but you can pay off that entire balance (and thereby pay no interest) and still improve your score.
Don’t bother unless you know you’re going to need a loan. You’re paying a % interest to kiss the credit monitoring companies’ ass. I mean, don’t sabotage your credit, but if you know you are going to apply for a loan or something affected by your credit score, fine, bump it up with whatever works. We pay ours off monthly, score be damned.
It doesn’t improve your credit. Source: my memory of various articles saying that, and my own 800+ credit score and having never carried a balance in my life.
Lenders like clients who are slightly in debt, because they are viewed as more lucrative over the long term. Making timely payments is good. Making timely payments with a big interest component is even better, since that’s how creditors make their money.
Whomever is downvoting you has never worked the back end of the financial sector. Those double-digit APYs aren’t just for show. The primary goal of the business is to get you to pay them. That’s why people who do pay off their loans are constantly getting notes in the mail about how their max credit is increasing and personal loans are available and please, please, please borrow more money on a longer time scale.
Anecdotally, I pay off my full balance every month and have an 830 credit score.
Most people aren’t reasonable card owners lol
Very normal to have more expenses in a month than you have in income. And if you don’t have savings (because you’re already living on the razor’s edge) then you need to assume debt.
You can definitely argue all sorts of mistakes people make in financializing that debt rather than eating it in other ways (lower quality of life, deferred maintenance, gig work as secondary income). But you’ll need to ignore the core reality of personal income being divorced from cost of living. Rents, utilities, car/education debt, and health care costs are consistently the highest budget items on any given person’s balance sheet. And so long as those costs continue to outgrow wages, you’re going to see more and more people falling into the debt trap over time.
There is no individual solution to a systemic problem, save escaping the system entirely. “I know a guy who fucked up…” anecdotes are - in my experience - far more often stories about kids from rich families who can absorb the debt or skate it using bankruptcy. The “I know a guy who played a perfect hand and is still totally fucked…” anecdotes are far less common to hear about but far more common in practice.
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.
Lol what? Who puts groceries on a ccard??? This is fucking nuts.
I put everything on credit cards, love those cash back rewards. I also pay them off in full each month.
That is not fucking nuts, but smart.
Playing a more powerful person’s game and breaking even for now is truly galaxy brain plays
People without money for food at the moment?
Do Crime
(Don’t do crime. Unless you’re good at it.)
I use my credit cards for points only. I budget exactly how much to spend on the credit cards and pay it off every month. Then I hop around different credit card companies to rack up more points.
Still borrowing money, but they ain’t making a dime off me.
They make money every time you use it. Not a lot, but it’s more than a dime.
That’s insane.
Nah just uneducated and over marketed to. They literally don’t know how to shop and think groceries is microwave mac n cheese and “hearty” canned chili
This guy thinks he understands today’s issues, you guys! It’s the young people’s fault, he says!
It’s not people’s fault, but it is their responsibility.
They are not to blame, but they must handle what has been passed on to them. It has always been thus.
Deciding “it’s not your problem” and choosing to blame others will simply make the problem last longer.
The fix starts with you. In my life, it started with me.
It’s not people’s fault, but it is their responsibility.
Need food today. No money in wallet. Must take out debt to afford food or I cannot earn money tomorrow.
Lemmy Solution: “Be fiscally responsible”
dies
Lemmy Commentary: “Stop dying. You’re hurting GDP.”
You got a severe case of the drama there, first worlder.
You don’t think they have debt outside the first world?
The Philippines is going to blow your mind.
Live your life as you wish. But putting words in my mouth sure doesn’t help your case.
lol
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.
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They probably mean things like Klarna, micro loans through Paypal or Venmo or Cash App etc.
A whole lot of online retail apps these days either use Klarna or their own in house … well its all differently subcontracted for each one, but there are a ton of different ways to do buy now pay later plans.
They have bad interest rates compared to a credit card you could get with the same credit score, generally.
On a side note: I love how on the one hand we get stories like this about American consumers having absurd monthly credit payments and barely any cash on hand, but at the same time we get stories and even Fed numbers saying consumer credit is doing fine actually.
Sezzle and Affirm now too. Also Four, Afterpay and whatever that like weird Amazon sponsored one is that sorts is Amazon pay but isn’t.
There are a fucking lots of buy now, pay later apps these days.
Also side note: And yeah the credit debt is actually in check because it’s kinda the battery that powers the economy of the United States.
As long as people can still make minimum payments that is.But seriously it has the spending power as a country as it does mostly because of the sorta guaranteed debt payments from the general populace. It’s why it loves people that generate huge debts and pays them back poorly. People like Trump and just upper middle class putting 10s-100s of thousands on debt are viewed as financially great for a reason.
Financialization is generally something that happens in the stage right before a society largely collapses, historically.
Its a huge contributor to wealth inequality.
It all works until it doesn’t.
But yeah, thanks for adding those other popular after pay systems I forgot!
Oh for sure it’s a super unstable bad idea but it works really well for a short time for those at the top. We really are just riding that edge out of hubris from those in charge.
On a side note: I love how on the one hand we get stories like this about American consumers having absurd monthly credit payments and barely any cash on hand, but at the same time we get stories and even Fed numbers saying consumer credit is doing fine actually.
I can only assume the Fed and government agencies make a point of only reporting metrics that show everything is fine. Lying with data is easy if you’re in control of how it’s summarized.
You mean the things they have been told are evil and will cause you to down in debt?
I don’t know why they aren’t applying for credit cards, even the $250 or $500 they could get with no or little credit would be a better devil to dance with than groceries on a payment plan.
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They are, but with a lower interest rate than pay later plans.
Klarna is fee free
Edit: Karma to Klarna, fucking autocorrect
There’s quite a few that just split it in 4 payments with no interest. And typically don’t need very good credit at all.
Why pay now when I don’t even know if I’ll still be alive next week?
How tall is that shopping cart or how short is that lady?
I believe she is crouched judging by the way she’s holding that jar
