Theoretically, credit should be used for one thing: to make more money. (not less)
However, instead of using it to buy or construct a machine to triple what you can produce in an hour, the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later.
At some point, you run out of hours available and the house of cards collapses.
i.e., credit can buy time in the nearly literal sense, you can do an hour's work in half an hour because the money facilitates it, meaning you can now make more money. If instead of investing in work you're spending on play, then you end up with a time deficit.
or, e.g. you can buy 3 franchises in 3 months instead of 3 years (i.e. income from the 1 franchise), trading credit for time to make more money, instead of burning it. It'd have been nice had they taught me this in school.
candiddevmike · 2m ago
For a lot of folks, credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time. Almost none of these people have the kind of collateral needed to use credit to truly transform their lives, and the government assistance for that is seriously lacking in the US (SBA loans are terrible, and you need enough money to cover your own salary until your business gets up and running).
UltraSane · 3m ago
I'm currently living off of investment gains from high interest consumer loans.
Neywiny · 14m ago
I think that's a bit disingenuous. It's not always delaying work. There's only so much time and there are some people who cannot afford to live with the time in the day, the skillset they have, and the market conditions (both income and expenses). Your tone and word choice shows you don't understand the problem at all.
If somebody can BNPL or otherwise credit lifesaving medicine (such as the many people in the USA who die from inability to afford healthcare), that's not play money because they don't want to work.
PostOnce · 12m ago
Obviously there are edge cases. Debt can be a form of insurance for the individual.
However, I stood in line behind someone who financed a bowl of noodles with afterpay, and it got me thinking. Those are the folks I'm talking about.
Neywiny · 1m ago
Sure, but could that not be an edge case? I'd imagine most people aren't sharing the sadder parts of their life. Or, is it possible they spent the rest of their money on everything more important? Could be argued they should cook at home but still.
jppope · 41m ago
thats interesting. I was always wondering what the hustle was, guess that was it- it was outside of the credit system
loeg · 20m ago
The hustle is mostly just getting merchants to eat bigger discounts in hope of selling more volume. Instead of eating ~3% interchange on a credit card, merchants eat ~6% subsidizing short-term BNPL loans.
NewJazz · 34m ago
It already shows up when mortgage lenders do their checks, AIUI.
candiddevmike · 5m ago
It would be interesting if BNPL money was reported/tracked by the Fed...
OptionOfT · 24m ago
What's interesting here is that normally BNPL only does a soft check.
I wonder if this is going to change.
Equally, I find it weird that companies can ding your credit for not paying but have no obligation to report on-time payments. It should be both or none.
ecshafer · 24m ago
This would probably only affect the people with the worst credit scores I imagine. I just don't see a ton of 800+ credit score people deciding to spend 5 payments of $20 for a pair of $80 shoes.
sodality2 · 15m ago
I always thought it was interesting that the BNPL loans’ interest is subsidized by the retailer, which pay the premium in order to improve the chance of a sale (hoping to hone in on those who can’t afford it now and make it back on that extra spend). Which means high credit score, wealthy spenders could put everything they can on BNPL plans and profit the (minuscule) interest over time, but if you can do that on big purchases, maybe it’ll add up. Same way credit cards work, if you have the cash flow and always pay them off in full, you can make a few bucks in a HYSA for the 40 ish days before the statement.
I can see a future where a BNPL loan is not offered if the signals the checkout page collects indicates wealth, since they don’t have an issue of cash flow stopping a purchase. Imagine a loan that has a credit score maximum, not a minimum.
benmanns · 1m ago
I’m not sure. I’m sophisticated enough to use BNPL and set aside the funds in a HYSA, but I never have as you miss out on: credit card rewards, credit card purchase protection, credit card extended warranties, credit card chargeback infrastructure. Additionally, I’ve seen BNPL offers where the first payment is in 2 weeks compared to 30-50 days for credit cards depending on when your statement closes and how soon you have to pay, so the extra interest is less than you might think. It could make sense for very large purchases, but then, that’s also where credit card features can really come in handy.
BrawnyBadger53 · 4m ago
Discriminating wealthy customers increases the risk profile of the loans which is already questionably high. Retailers are used to paying extra for credit card transactions anyways. BNPL really is just meant to compete with credit cards by splitting the runway across more months for the loan. Equally predatory business model but credit cards are able to offer the same interest amortization that you can do with bnpl through the rewards programs. They're effectively the same.
loeg · 19m ago
Plenty of people with good credit use BNPL loans; they are offered on much higher cost items than $80.
ZYbCRq22HbJ2y7 · 19m ago
That would depend on the fees and interest, no?
seatac76 · 23m ago
It probably makes sense to do so. Not that I condone the FICO hustle. But small loans can add up quickly and delinquencies need to be measured for financial market stability.
kurthr · 18m ago
If you're paying for your food delivery on an installment plan, you're probably going to have a blow up.
"The industry has long believed that consumers using BNPL responsibly should result in positive credit scores, as the majority of users are paying back in full and on time."
steveBK123 · 6m ago
Because "most people pay back fully on time" is not the metric.
The real question is what are the delinquency and default rates for BNPL as compared to other forms of consumer credit.
Given the previous understanding that it didn't hit your FICO, the retailer subsidy as a sales lead, and the types of products people were financing.. one might assume worse..
UltraSane · 3m ago
If customers make every payment their score should improve.
However, instead of using it to buy or construct a machine to triple what you can produce in an hour, the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later.
At some point, you run out of hours available and the house of cards collapses.
i.e., credit can buy time in the nearly literal sense, you can do an hour's work in half an hour because the money facilitates it, meaning you can now make more money. If instead of investing in work you're spending on play, then you end up with a time deficit.
or, e.g. you can buy 3 franchises in 3 months instead of 3 years (i.e. income from the 1 franchise), trading credit for time to make more money, instead of burning it. It'd have been nice had they taught me this in school.
If somebody can BNPL or otherwise credit lifesaving medicine (such as the many people in the USA who die from inability to afford healthcare), that's not play money because they don't want to work.
However, I stood in line behind someone who financed a bowl of noodles with afterpay, and it got me thinking. Those are the folks I'm talking about.
I wonder if this is going to change.
Equally, I find it weird that companies can ding your credit for not paying but have no obligation to report on-time payments. It should be both or none.
I can see a future where a BNPL loan is not offered if the signals the checkout page collects indicates wealth, since they don’t have an issue of cash flow stopping a purchase. Imagine a loan that has a credit score maximum, not a minimum.
https://www.nytimes.com/2025/03/23/business/doordash-klarna-...
"The industry has long believed that consumers using BNPL responsibly should result in positive credit scores, as the majority of users are paying back in full and on time."
The real question is what are the delinquency and default rates for BNPL as compared to other forms of consumer credit.
Given the previous understanding that it didn't hit your FICO, the retailer subsidy as a sales lead, and the types of products people were financing.. one might assume worse..