Britain is Cracking Down on the $3.7 Billion 'Buy Now, Pay Later' Industry (cnbc.com) 131
Popular "buy now, pay later" shopping services like Klarna will face stricter regulation under proposals announced by the U.K. government Tuesday. From a report: The Treasury said buy now, pay later (BNPL) firms would come under the supervision of the Financial Conduct Authority (FCA), which regulates financial services firms and markets in Britain. Such firms will be required to conduct affordability checks before lending to customers, the government said, while people will also be allowed to escalate complaints to the U.K.'s financial ombudsman. BNPL products are used as an alternative to credit cards and have exploded in popularity during the coronavirus pandemic, as people turned to online shopping due to lockdown restrictions. Popularized by the Swedish start-up Klarna, these services let customers spread out the cost of their purchases over a period of interest-free instalments. Other companies in the space include Australia's Afterpay, which operates the Clearpay brand in the U.K., and Laybuy.
Cell phones (Score:2)
I hope they apply the same logic to cell phones as well. If you can't afford a $1000 phone outright, you can't afford it by paying it on 2 years either.
If you need a line of credit (or mortgage), then you go to a bank, ask for one, and pay interest.
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You missed something from the OP, get a loan at a reputable bank because it'll be ( a lot) cheaper.
You missed something from that PP, namely that being poor you ain't gettin no loan from a bank.
And while I'm no fan of the extortion prices attached to phones through contracts, PP actually states a valid use case.
Needing a certain piece of hardware in order to start/do a job which will provide for funding later, while not having the funds or ways to get them at present time.
Sure, bank might get you a better deal, but if you're eligible for a loan from a bank that usually means you're not below a poverty li
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AT&T gave me 0% interest. What bank is beating that?
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Nobody uses a phone for voice calls anymore. checkmate.
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And hiked price on the phone
Nope, retail price.
and calls.
Same price as if I was not financing a phone. While that is where they are recovering any financing costs, they're recovering them from all users. So...may as well finance a phone.
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Same price as if I was not financing a phone. While that is where they are recovering any financing costs, they're recovering them from all users. So...may as well finance a phone.
Yup. What you are describing there is a text book example of a market failure. In a perfect competition, there would be carriers offering better prices without the financing. So those offering "free" financing would go bankrupt. Since market forces do not apply in this oligopoly situation, we need the government to regulate the industry.
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Yup. What you are describing there is a text book example of a market failure. In a perfect competition, there would be carriers offering better prices without the financing.
If financing was the only difference. In this particular case, AT&T gets to use the phone financing as a mechanism to lock me in to their service. That lock-in has a value, offsetting the "loss" via financing.
Your analysis of the market is a bit too simplistic. That's not to say we don't have an oligopoly, just that "cheaper monthly rate" may not be the end-all of competition.
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SIM-locking is another text book example of a market failure. So I don't see your point.
In a competitive market the software feature of SIM-locking wouldn't even have been developed.
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In a competitive market the software feature of SIM-locking wouldn't even have been developed.
You not wanting it to have come to pass doesn't make this true.
If companies are offering any "sign up for ___ months and you get ____" kind of contract, they're going to want ways to enforce that contract. SIM locking provides that.
"Competitive market" doesn't stop companies from offering that sort of contract. If anything, it makes it more likely because then they don't have to compete for you during the contract's term.
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In a competitive market the software feature of SIM-locking wouldn't even have been developed.
You not wanting it to have come to pass doesn't make this true.
If companies are offering any "sign up for ___ months and you get ____" kind of contract, they're going to want ways to enforce that contract. SIM locking provides that.
No it doesn't. Canada has banned SIM locking and device financing is still the standard way to get a phone. Just as much as it did before the ban. Nothing changed.
But anyways as I said, in a competitive market, there wouldn't be any "sign up for ___ months and you get ____". Therefore, that wouldn't be a good reason to develop and maintain the SIM-locking feature.
"Competitive market" doesn't stop companies from offering that sort of contract.
It doesn't stop. But it create an incentive not to. Companies offering that sort of contract will be avoided like plague by customers and therefor
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No it doesn't. Canada has banned SIM locking and device financing is still the standard way to get a phone
I never said it was required, I said companies would want it and thus develop it.
But anyways as I said, in a competitive market, there wouldn't be any "sign up for ___ months and you get ____".
Why not? Long-term contracts for services are not at all uncommon in any market.
Companies offering that sort of contract will be avoided like plague by customers and therefore will go bankrupt.
Will be avoided by you. Others will look at what they're getting offered and take it or leave it based on the offer.
"Let's see...prices have been heading up, and they're going to lock-in the price at the current rate for 2 years. I've liked their service so far, and thus I currently have no particular drive for an alternative."
Now, why would that
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No it doesn't. Canada has banned SIM locking and device financing is still the standard way to get a phone
I never said it was required, I said companies would want it and thus develop it.
In a competitive market, they wouldn't want it. Just like they wouldn't want to add a software feature which crashes the phone on every February 4th. They would add features people want, because it would help sales. SIM-locking is an anti-feature. People prefer unlocked phones. Any cent spent developing it is wasted.
But anyways as I said, in a competitive market, there wouldn't be any "sign up for ___ months and you get ____".
Why not? Long-term contracts for services are not at all uncommon in any market.
I'm not talking about the length of the contract. I am talking about sign-up bonuses. There wouldn't be any in a competitive market. Just like you don't get a rebate on the first stock you buy,
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Can you see your irrelevance in this thread?
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Your dad's company's practice just reflect the fact that it is common to get a phone subsidized by the carrier, which in turn raise prices to get a profit. There is no free lunch.
If the practice was banned/limited, then companies would evolve. They could pay, say, the first $50 instead of $100, and also allow some money for the phone itself. Would end up a win situation for everyone.
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But the practice should not be banned. Customers already have choices and they overwhelmingly want the plans you do not like.
You think customers have choices but they don't. It's an oligopoly dominated by usually 2-3 players (4 at most in most places).
The lack of choice is so clear that even people with money in a savings account, giving them 0.5% interest, finance their phone on 1-2 years. You need to understand that cell phone plan prices are much more than 0.5% more expensive because of the cell phone financing.
Look i am not poor and have good enough credit to get a home loan , etc. And what phone plan do i get ? Iphone forever from sprint. No it is not the cheapest way to get a phone. But it is the most convenient way for me to have the most up to date iphone and spreading the cost over 1 year works for me. Also sprints “rates” are actually lower than putting a phone on a credit card for 12-16 months AND i do not have to open a new account and take a credit score hit like i could with an actual loan.
Why would you finance a phone on a credit card? With a 20% interested rate, sounds like the dumbest suggestion I've s
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First off you are simply wrong about lack of choice. You do not have to buy your phone from your carrier.
I never said you do. It's just that a lot of people get their phone through their carrier even if they don't need the financing. The lack of choice is there, you lack the choice to get a rebate when you don't take the financing. Everybody is paying more to support these plans.
You do not pay 20 % more for an iPhone buying it on a plan.
That's not what I said. What I said is that services plans are more expensive. 20% is just a guess. I don't know maybe it's 5%, 10%, 30%. You don't know either. But the fact remains that everybody is paying more to support that "0%" fi
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so I forgot to add that you don't need to keep money in a savings account for emergencies, especially if you have big debts (car, house, student loans). You only need a line of credit so that your bank account can go in the negative in case of an emergency. I have a line of credit tied to my mortgage. Therefore my mortgage can be paid in full and if I need money for an emergency I can get some at a quite low interest rate (since it's a secure loan).
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Emergency savings has a value beyond the interest you earn on it. It is designed to avoid loss of opportunity and to limit costs associated with unexpected events. When the rioter slashes your tires you use emergency funds to fix your car so you can work. When you get an offer for a big side job and need a couple grand for supplies or to pay labor upfront. When your partner loses their job and can not pay their normal contribution you do not get late fees , evictions , etc.
It is not “dumb” because you are losing money. You are forgetting that liquidity itself has value. Sure if you are really rich the issue becomes moot at some point. For working and middle class people or those who use systems to budget personal cash flow is a consideration. Even large companies see the value of cash flow and use financing to keep liquid cash on hand.
You don't need emergency savings when you have a mortgage, or debts in general. It would be quite dumb to pay 3% on a mortgage and have a sizable amount of money in a 1% savings account. Not only you lose 2%, but you even need to pay tax on that 1% (at least where I live).
Instead, you can have a margin account, tied to your mortgage. So you pay your mortgage as quick as you can, and if you need emergency money, you can get some at 3% anyways. The only limit in my case is 80% of the value of my house (could
Re: Cell phones (Score:2)
Loans have interest. Most buy now pay later only charge interest if you don't get their terms. (Min monthly payment and pay off before deadline) equal zero to near zero interest.
Also banks only like you having x number of loans at a time yet you can have 5-10 credit cards at once no issue.
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Cracking down on an industry isn't the same as just outlawing it. Often these industries are abusing the privileges, offering interest rates that are not obvious which may be overly high, or creating a condition where they cannot just buy the product with cash, forcing them to pay interest.
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Then get a cheaper smartphone. Or a second-hand one. Or if you really need that $600 phone for your job, then go to a bank, get a loan, pay interest, and stop forcing the rest of us to pay for your "0% interest" loan through the carrier, which is just jacking up prices to get its money back.
What's the point (Score:1)
What's the point of service like that? I don't get it.. Is it to fill the market gap for consumers who are not in position to get a credit card but want to buy stuff which they can't afford?
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Don't you have to have a credit card to still buy a BNPL type thing?
At least that's how I've only ever seen them in the states....is UK different in this respect?
I find it hard to believe any company would send you something without some form of payment on record....and just making it a matter of when to start collecting and how much is collected over time.
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Re:What's the point (Score:5, Informative)
Here's a much more informative article: Why Is There Financing for Everything Now? [theatlantic.com]
These companies put forth a range of financing alternatives, but their most ubiquitous breaks down purchases into two to four installments, paid automatically over a few weeks or months, usually with your debit card. The fine print varies, but the plans typically charge no interest, and the penalty for missing a payment ranges from nothing to nominal—seven or eight bucks. (Credit cards are also accepted, but that, of course, introduces the possibility of paying interest.) Upon checkout, you give the store’s lending partner your name, address, phone number, and birth date, and are approved or rejected based on an algorithm in lieu of a full credit check. None of the major lenders discloses the criteria included in their algorithms, but the time of day and the size of your purchase are often cited as examples of what might be considered—bad news if you want to spend a lot of money at three in the morning.
According to the lenders, their revenue comes primarily from stores, which pay much more than they would to process the same transactions with credit cards. Why are retailers willing to fork over the extra money? “They say consumers are more likely to shop; they see consumers spending a bit more money and shopping more regularly,” says David Sykes, the head of Klarna’s U.S. division. He compares his firm’s business model to the one with which the Home Shopping Network struck gold decades ago: When people hear “four payments of $25,” they just don’t feel like they’re spending $100.
So, it's a Jedi mind trick (4 x $25 =/= $100) backed up by your existing debit/credit account and paid for by the retailer in order to increase the likelihood of you making a purchase.
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Perhaps less that people don't understand the total amount to be paid, and more that they see the relatively low monthly amounts and don't account for how they add up or what the consequences will be if they lose their jobs.
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It's the debit card payment option.
They're buying on credit but paying with debit. It's an upgrade of their card to credit card status, without paying for credit card fees.
I.e. A poor person's credit card.
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I'm the type that generally does not waste my money on piddly shit....but I do like to save up for BIG toys. Once or twice a year, I'll drop some serious coin on things...maybe a new lens that is about $2300, or new gun, guitar, camera, motorcycle, computer....whatever.
But I save and wait till I have cash to pay for it.
Now...I have NO compunction to taking advantage of c
Re: What's the point (Score:2, Insightful)
Is credit card use in the UK more like the US or more like Germany? ... sane ... thing.)
Because to me, only the US has this obsesson with debt trap cards ("credit cards").
But it might be only us Germans who don't. (Almost nobody ever pays with a credit card here. In all cases it is 3-4% more expensive, and in many cases you outrigt can't pay with one. To me, credit cards are jist not a
Re: What's the point (Score:4, Insightful)
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In the United States, in almost all cases the price is the same whether you pay with a credit card or with a check or cash. Yes, it is certainly foolish to run a credit card balance, but when you always pay off the entire balance every month, it is quite convenient, a useful way to track expenses, and you pay no interest. Sehr gescheit.
If you pay off the entire balance every month it is not the "buy now, pay later" that is being discussed; it's basically just using the credit card as a way to not carry around money.
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Yes, it is certainly foolish to run a credit card balance, but when you always pay off the entire balance every month, it is quite convenient, a useful way to track expenses, and you pay no interest.
It's also more secure, as most credit card companies accept liability for fraud. If someone starts writing fraudulent checks in your name, good luck!
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Actually it's more expensive to pay cash or check. Get a card with 2% cash back on all purchases, set up auto-pay to avoid late fees. So the tiers of pricing are actually - highest prices for poor people who get into debt and buy on interest; middle prices for people with middling credit scores who pay cash or 0% back cards; lowest prices for people with good credit who can buy in b
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Not only is the price the same, but many credit cards offer incentives such as airmiles or cashback - so it actually works out cheaper as well as being more convenient.
Credit cards are also a convenient way to pay a refundable deposit (eg for a hotel room or car rental) as the deposit is taken off your credit limit but not actually billed to you.
Another convenience is dispute resolution, in the case of a transaction dispute or fraud you aren't out of pocket while the bank investigates.
Credit (and some debit
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beyond this; you probably get paid some kind of kick back in terms of rewards and you get various protections and the ability to do a charge back if the merchant does not deliver or wont accept a return of defective product etc.
Basically paying with not a credit card is down right silly; about the only reason to ever use cash or check is if the merchant can't take a CC or you have a privacy concern or desire to avoid provability.
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Credit cards give you free shit. Cash back, airline tickets, donations to your favorite charity, etc. Debit cards don't give you jack and some banks charge you $5/month if you used an out-of-network ATM (on top of the $1-$4 the ATM owner charges) to get cash.
But mostly Americans use credit cards because a long history of marketing has normalized the behavior here. It's also likely that there are cultural differences between Americans and Germans on conspicuous wealth and material possessions as status.
Credi
TANSTAAFL [Re: What's the point] (Score:2)
Credit cards give you free shit. Cash back, airline tickets, donations to your favorite charity, etc.
No they don't.
They give you a very slightly discounted price-- a few percent. "Cash back" manifests as: a slightly lower cost on your bill. You do not get cash back (and if you did: you paid for that cash).
And often, taht discount manifests in the form of useless stuff, like airline points that you never use.
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"Cash Back" is funded via higher interest rates. If you pay it off every month, you get cash back but are not charged interest.
You're basically profiting off other people financing things on credit cards.
Cash back is still cash out [Re:TANSTAAFL] (Score:2)
"Cash Back" is funded via higher interest rates.
You don't get cash back. When the bill comes, cash flows away from you, not to you. You pay slightly less.
You're basically profiting off other people financing things on credit cards.
You're basically getting a small cost reduction because other people finance things on credit cards.
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I beg to differ.
With my Costco Visa, annually, I get a certificate that I can take into my local Costco and cash it for....CASH.
I have other cards that at any time, I can have that "cash back" sent directly to my checking account, which I can take out at any time via the ATM as...you guessed it....CASH.
I suppose it depends on your card and the terms of said card, but I can most assuredly get cash for my cash back.
Yes, even with an Apple Card, I can get that cash sent to and dep
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No its actually mostly funded by merchant fees. Most of the merchant agreements don't let them offer cash discounts or credit card service charges, gas stations and some other very low margin business get exceptions, as well as public sector stuff.
So you are really profiting off the backs of people who use cash. Frankly I don't feel to bad about it though because just about everyone who wants one qualifies for card, right down to people with no credit history at all. You have to have made some amazingly
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You pay slightly less.
That's where the "pay it off every month" part comes in. That way you pay 0 interest, and most of these cards are 0 fees.
So, I could pay $100 with my debit card. Or I could put that on a credit card and pay $100 when the bill comes, and receive $1 when they do the "cash back" part. How it's disbursed depends on the card - they either take $1 off some future bill or they give me a check or check-like thing.
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We seem to be talking about different things.
I would say, if you give somebody $100 for a purchase, and they give you $1 back, the price was $99.
You seem to be saying, if they give you $1 back, ignore the $100, you just got free money.
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Typically, the cash back is not credited at the same time that the charges are debited. It lets the credit card issuer charge you more interest, since your balance will be higher than if they credited you the same month as the purchase.
So, it's not really a discount. That would require applying it during the same billing period.
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No they don't.
Something you wouldn't normally get is available at no cost. You don't have to pay fees in some of these cards. And you can avoid interest by paying before your grace period. Sounds suspiciously like free to me!
And often, taht discount manifests in the form of useless stuff, like airline points that you never use.
I always use mine. I usually buy first class tickets because they expire quickly but I only travel twice a year. And I wouldn't normally pay for first class.
The point of these programs is you pick one that gives you stuff that you might actually use. Not get one then bitch about how you never use the
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No they don't.
Something you wouldn't normally get is available at no cost.
When the bill comes, does the credit card pay you money? Or do you pay them money?
You pay them money.
This is not "free".
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You pay them money.
Actually I don't pay them money. I pay my debt and no interest and no fee.
The credit card company brokers a loan and paid the merchant. I received a good or service from the merchant in exchange. It's zero sum.
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You pay them money.
Actually I don't pay them money. I pay my debt
You "pay your debt" by giving money to the credit card company.
The English phras for that is: "you pay them money."
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When the bill comes, does the credit card pay you money? Or do you pay them money?
I pay the gas station, grocery store, restaurants, etc. If I weren't using the credit card, I'd be making the same purchases using a debit card. Instead, the credit card company pays me a few percent for the privilege of being an intermediary.
Money flows away from you (Score:2)
When the bill comes, does the credit card pay you money? Or do you pay them money?
I pay the gas station, grocery store, restaurants, etc.
No, you pay the credit card company. The credit card company undoubtably pays the gas station, grocery store, restaurants, etc., but you send money to the credit card company
If I weren't using the credit card, I'd be making the same purchases using a debit card.
So? If I shop at place X that costs less than place Y, you don't call it "Place X pays me money!" No, they cost less. If you shop with a credit card, and it costs you less than if you shop without one, they are not paying you money.
Instead, the credit card company pays me a few percent for the privilege of being an intermediary.
You say "they pay me a few percent", but actually they "they lower your payment by a few percent".
I'm n
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No, you pay the credit card company.
If I paid cash, would you be arguing that I'm not paying the business? I actually pay the cashier who then undoubtedly puts the cash in the register and it gets deposited into the business's bank account at the end of the day. Meaningless pedantry.
You say "they pay me a few percent", but actually they "they lower your payment by a few percent".
Would it make you feel better if I said I get a "free credit on an invoice" instead of a "free payment"? I'd say the distinction between "credit on an invoice" and "payment" is again meaningless pedantry, in the discussion of whether credit cards "give you free st
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Only if you make purchases beyond what you normally would purely because your credit card gives you a few points off. That's a strawman of what I'm pointing out, which is that you can get free stuff if you use a credit card that offers rewards instead of a debit card or cash.
And what I'm pointing out is that you pay for that "free" stuff.
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Stores eat the card fees because the cost of taking cash is often higher.
You have to pay for and provide change, you have to keep track of the cash, you have to pay to transport the cash to the bank and deposit it, you have to take precautions including higher security to prevent or deter theft, you have to eat losses due to errors / lost cash / theft etc. All of these costs can be quite high, and often much higher than card processing costs.
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Depends on the business. If you still pay employees in cash, which is still fairly common with a sole proprietorship, then getting rid of a big stack of $20's is simple when you go to pay your part time staff. You still have to record it in the books, but you don't have to pay a bank to process cash. And you don't have to hire a payroll company. Those types of businesses are going away though. They'll go extinct within my lifetime.
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Many countries strongly discourage paying employees with cash, and most employees don't want to be paid with cash unless it doesn't go through the books (ie they want to evade taxes or other legal implications)...
In many countries, making transactions of any significant size with cash is discouraged and/or viewed with suspicion. Legitimate large transactions are always conducted via banks, while only shady types (tax evaders, criminals etc) use cash. Many businesses you need to interact with as a customer w
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In some ways my country (the USA) operates more like a third world country. And the kind of money you have to deposit before banks are required to report it is beyond what a dishwasher makes.
I would say if we take the world as a whole, the countries that require electronic transfers are in the minority. But this is a statistical trick, most countries are backwards and shitholes.
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I consistently use a credit card in the US. And at the end of the month, when I receive my bill, I pay in full.
Doing that costs nothing- the is no charge. In fact it can be beneficial to your credit score depending on what percentage of your total available line of credit you use.
Of course, that mean being the kind of person who actually pays the entire amount and doesn't fall for the "make minimum payment" trap.
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They provide a payment processing service and charge a chunk per transaction (about 50 cents per transaction where I'm from) regardless if you decide to pay now or later. They also charge late fees if anyone forgets to pay in time.
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It fills broadly the same niche as a credit card without needing you to pay with a credit card. From a retailer perspective they're attractive since they do all the payment processing for you.
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In Australia, the retailers don't like Afterpay and the like because they charge far higher fees than the credit card processing networks, but prevent the retailers form passing the costs on to the customer. They feel they have to offer these payment options, because "everyone else does". In Australia, the credit card processors can't prevent them from passing on costs to the customer, but for some reason this doesn't apply to Afterpay.
Re:What's the point (Score:4, Insightful)
To understand why they exist you need to understand a bit of modern history.
In the 80s the British government promoted buying stuff on credit. Everyone could own aspirational things like houses, shares, new cars, electronics, all of it... Because credit was available. People loved it because it felt like their lives were improving, they could "afford" all this stuff when before it would have taken ages to save up for.
Of course it was a house of cards that eventually collapsed in 2008. Unfortunately by that point it had become completely normal to do this sort of thing, for everything. Worse still things had also got very expensive to buy outright, because everyone was buying on credit.
For example most cars are sold on credit or lease now. That was fine as long as the economy was doing okay, but as soon as the pandemic hit and people started losing their jobs they started having trouble with these kinds of agreements.
Re:What's the point (Score:5, Insightful)
In the '80s, buying on credit made sense. You had double-digit wage inflation, so if you tried to save money, the real value would inflate away. On the other hand, if you borrowed money, the real value of your debt would inflate away. If you bought stuff that appreciated or helped you generate income (e.g. an investment property to rent out), you were far better off borrowing than saving up to do it. Of course, economic conditions are very different now.
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After the high inflation of 1970s pensions and similar retirement schemes adjusted for inflation. However after 1980s they did not scale back in their outlook, and now the future generations are saddled with implied debt to previous generations.
Any time inflation rises, or investment returns are high, funds would increase future benefits, or decrease funding rates, or a combination of both. However I have never seen benefits decrease when the economy was bad (like for example in 2020).
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Bit of revisionism there. I don't ever recall the British government promoting personal credit, the 80s were the days of 10% base rates and having to have an interview with your bank manager if you wanted a loan or a mortgage.
Credit is so widespread today because it's so cheap. QE and rock bottom base rates have seen to that.
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For example most cars are sold on credit or lease now. That was fine as long as the economy was doing okay, but as soon as the pandemic hit and people started losing their jobs they started having trouble with these kinds of agreements.
I can't speak as to how things were in the UK, but just so you know, this is exactly how the vast majority of Americans buy cars. I have a very small number of friends who have unusual (for an American) amounts of cash in the bank who actually bought cars outright, but most people, including me, have to finance them. I remember one old friend of mine told me years ago about buying a new car outright off the dealer lot and he was amused because it had been so long since they had actually sold a car witho
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A friend of mine recently bought a car and wanted to pay up front. Well, none of the manufacturer incentives even qualified unless you took out $10k minimum financing. There was no early payoff fee (checked in advance), so they bought the car with $10k financed and the balance (~$14k) up front, then sent a check for the payoff amount as soon as they received it from the loan servicer a week and half later.
How stupid is that?
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In the 80s the British government promoted buying stuff on credit. Everyone could own aspirational things like houses, shares, new cars, electronics, all of it... Because credit was available. People loved it because it felt like their lives were improving, they could "afford" all this stuff when before it would have taken ages to save up for.
I think there is a piece missing from your history lesson. I remember hearing a story that in the UK in the 1970s, companies would offer cars as part of employee compensation, but it wasn't taxed as income. This crated a huge boom in auto sales as companies frequently purchased cars for employees. When the government cracked down on that tax loophole in the early 1980s, car sales plummeted, and the government urged consumers to purchase cars on credit to save the UK auto industry.
Of course I can't find
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My parents first house was about 3x annual salary and they got a mortgage for it no problem. The mortgage was affordable and the deposit was 10%, also very affordable.
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I did the same in 2003, but the down payment was only 5%. I paid off the mortgage in 2019. That's a five-bedroom two-bathroom home. Also, I probably make less than just about anyone reading this--I'm income eligible for food stamps.
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And of course while you're paying rent, your ability to save is reduced, unless you're living with parents or some other very cheap/free living arrangement.
Most mortgages are interest+principal, so it's only the interest that you're really paying. The principal is basically savings, as you can sell the property later and get it back.
Many landlords also have mortgages, and they expect the rental income to cover their mortgage costs.
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I don't get the expected grief from co-workers and management when they realize that I purchased my home outright. I have no doubt that after these two years, I can easily sell it for more than four times what I paid for it. Yes, it's a dump, but it is a paid-for dump and it continues to get better.
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What's the point of service like that? I don't get it.. Is it to fill the market gap for consumers who are not in position to get a credit card but want to buy stuff which they can't afford?
The point is that the sellers are having problem selling without it. Because consumers are far more cautious lately in spending habits. So, an interest free loan to the consumer to get the sale. From the seller's point of view this is less good than an outright sale but far superior to sitting on unsold inventory.
Try Running A Busines Without It (Score:3)
Re: Try Running A Busines Without It (Score:2)
This sounds like a job for jurisdiction.
If nobody can offer it, and everyone *has* to pay in full, then nobody would complain that you ask for the damn amount they freakin agreed to pay!
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I have been considering this as a payment option for the company i run.
Are you in the financial industry? Because this is how you get into the financial industry.
It's probably best to partner with a financial service provider. Leave it up to the experts.
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If people could only buy, * (Score:5, Insightful)
what they actually had the money for ...
then the world would be a much better place.
If they could only sell, what they worked for, then it would be even better. (Yes, media industry, banks, etc, I'm looking at you.)
_ _ _
* Slashdot's subject length limit is too damn short!
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It's the only way to pay for school taxes around here. Maybe they would take a money order or envelope of cash but I doubt it. Once in a while you see the occasional holdout at the grocery store writing a check.
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Umm, "legal tender for all debts, public and private". If you want to pay it with an envelope full of cash, they're pretty much required to take it. In the US, at least.
Yeah, I know - who is going to bother going to the bank and withdrawing $30K in twenties to buy a new car? But you can legally do so. And if you're pretty sure they'll refuse to take the cash, bring a lawyer with
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That doesn't mean what you think it means. Try paying with cash at state agencies like the DMV and they will tell you to piss off. Credit/Check/Money orders only.
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My idiot mortgage servicer charges a FEE to pay by ACH. But paying by check is "free." So every month they get to open my envelope, extract my check, and scan it through and enter my total by hand, including the payment stub where they have to break out the check total from the minimum payment and extra to principle and escrow.
I would never in a million years support a business like that voluntarily, but they bought my loan from the bank I got it from (and serviced it for 6 years) and the interest rate is i
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Then only the rich would own houses and cars and the rest of us would be subject to paying rent and taxis that would charge so much so the rich stay rich.
The problem is BNPL is pretty predatory. Ignore the fact that once interest starts it could cost you 100% more to pay it off, or that it's really overpriced.
Basically the rules are it's good as long as payment is in full by the due date, and you pay a certain amount every month. But if you fail to pay it off (the monthly amount covers only 50-75% of the fu
People don't turn to these services because of (Score:2)
Remember, a lot of these aren't TVs, they're beds, washer & dryers, dishwashers, vacuums, basic household furniture, etc. TVs are cheap. I have a 42" one because a friend's dad just gave it to me. But I needed a new mattress since the
Re:People don't turn to these services because of (Score:4, Insightful)
No they don't, they use it to get in over their heads and the loans charge people with high interest rates. It fleeces those with low incomes. You can use services online that charge significantly less interest. Keep in mind that that 3.5 billion dollars is coming from people that need it the most, we don't need payday loan places, and if we do, they need to charge reasonable interest.
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You can use services online that charge significantly less interest
If you can pass their credit check.
If you can't....well, guess you're gonna just have to sleep on the floor, peasant.
This is old school (Score:2)
There is no such thing as "interest free" (Score:3)
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My only surprise in this story is the implication that the FCA (Financial Conduct Authority) didn't already have Authority over the Conduct of these companies sel
Long overdue because we all pay (Score:3)
Set aside for a moment BNPL is often predatory, pushed to those customers least able to afford the purchase. You should want this practice fixed, and properly regualted, even if you don't use BNPL, because we all pay for it
The default rate on BNPL loans is much higher than traditional credit. The cost of the defaults are shared not only by all BNPL purchasers, but by every customer who purchases from that business. Defaulted loans are a business expense, and every business expense is included in product price, so they can be recovered from all the customers. (Sidenote: same applies for shoplifting: we all pay for it).
Too often interest-free BNPL plans are charging interest, often at very high rates, by using additional charges like "administration fee" instead of showing the interest costs. A lot of bait and switch goes on as well: great sale price advertised, with BNPL plans promoted, but, too often the advertised sale price does not apply if you opt for BNPL. If mentioned at all, it's hidden in the conditions and disclaimers section at the bottom of the advertisement, in extremely small print.
BNPL can be a way to build credit, or get started on re-establishing credit, but, too often it's far more expensive than outright purchase. Worst case scenario (and this happens far too often) it's cheaper to put the purchase on a credit card and spread the payments out over the same time period.
Klarna = scammers (Score:3)
In Sweden where Klarna started, their check-out process (provided as a service to e-tailers) made it more difficult for the e-tailers' customers to not Buy-Now-Pay-Later. The result was of course that an unusual amount of customers got bound up in these schemes. Many complaints were filed to the consumer agency. This conduct had become such a problem that a couple years ago, the law got changed to curb it.
There have also been reports of customers not receiving their bills - with unpaid bills leading to debt collecting. Klarna then ran their own debt-collecting service, but using another brand.
One of Klarna's founders has even bragged about this conduct at fin-tech conferences.