Poll of the Day > What are your thoughts on "pay over time" payment methods?

(+) Yeah! (+)

They are getting very popular now, basically instead of paying all at once you pay a portion of the cost over several weeks or months. Sometimes there is a small fee but their big selling point is they dont charge you any interest

Personally I think they are great if you need something immediately, like if something important breaks and you need to replace it ASAP. Using a pay over time payment to buy food is pretty ridiculous though, and you have to be extra careful to watch your spending when using them because they do add up quickly.

It's generally a trap that ensnares the poor and financially illiterate.

Blue_Thunder posted...

It's generally a trap that ensnares the poor and financially illiterate.

Bingo

No kid is going to read the fine print when ordering something online

I think society should be very concerned by the existence of the ability to finance a take out pizza.

Blue_Thunder posted...

It's a trap that ensnares the poor and financially illiterate.

This, but they can also be useful. There are times when going into debt is a good idea, and having more opportunities for that can help can provide useful flexibility. Such offerings overwhelmingly lean on suckering people into them by emphasizing the "pay nothing now!" part over the "pay more later" part, though, preying on people who don't have the head for numbers needed to evaluate how much sense a given financing decision makes.

faramir77 posted...

I think society should be very concerned by the existence of the ability to finance a take out pizza.

Technically, that's always been a thing because of how credit cards work, but that is definitely a pretty massive red flag for the economy.

Damn_Underscore posted...

They are getting very popular now

Layaway has been a thing longer than anyone on this site has been alive.

It used to be pretty common at stores like K-Mart. The only reason it sort of went away was because credit cards grew in popularity and sort of replaced it.

But it'll always be a popular concept when the economy is poor and people's credit is bad, as long as retailers are willing to offer it.

I believe KMart layaway didn't give you the item until it was fully paid off so that is a major difference that makes them useful for different things

I've never understood what makes pay over time worse than a credit card but then again I've never paid a cent of interest on my credit card. But I've also never cared to look into it.

If this was 1980 I currently have enough cash to buy a house... cash.

The concept is not inherently bad but...

Blue_Thunder posted...

It's generally a trap that ensnares the poor and financially illiterate.

This is usually their main purpose.

It's to get the same people who use credit cards for "advanced purchases" for stuff they can't actually afford.

josh posted...

I've never understood what makes pay over time worse than a credit card but then again I've never paid a cent of interest on my credit card. But I've also never cared to look into it.

I think thats a good way of putting it, they are a literally a more dangerous version of credit cards. They benefit the companies because they will definitely get more interest payments, and consumers benefit because they have more options to buy things

Some people still hate credit cards (Dave Ramsey), so why not just buy it with cash? has been an argument used for decades against credit cards. Im not saying its necessarily wrong to hate credit cards but the ironic thing is people like Dave Ramsey will call you stupid if you disagree with them. If you dont like them dont use them, but they should at least be a financial option for everyone.

josh posted...

I've never understood what makes pay over time worse than a credit card but then again I've never paid a cent of interest on my credit card. But I've also never cared to look into it.

Nothing intrinsically, it just tends to be marketed as its own thing, and being outside of the sphere of credit cards means you don't necessarily have the same broader social wisdom of treating credit cards with respect pressuring people to make sensible financial decisions.

josh posted...

I've never understood what makes pay over time worse than a credit card...

BNPL methods are less regulated (eg. they don't have to report to credit bureaus) and generally have few or no rewards or consumer protections like fraud protection.

Blue_Thunder posted...

generally have few or no rewards

This is what Amazon does. They make it REALLY easy to pay over time and there are no fees whatsoever, but the catch is you don't get any rewards for your Amazon card. I think that is fair though, don't use pay over time unless you need to.

I understand the use case but they're no different than Credit Cards, Rent-A-Center, Layaway and every other past iteration of the concept of credit.

Blind hate for credit cards is weird. Over the course of a year, I earn like half a week's pay and i don't pay any fees.

pedro45 posted...

Blind hate for credit cards is weird. Over the course of a year, I earn like half a week's pay and i don't pay any fees.

Only people in real life I've seen complain about credit cards are muslim. I think there's arguments for and against it being haram, obviously the ones against it rationalize that you don't need one anyway.

For me I use my credit card religiously, I'd rather spend someone else's money then just pay that credit card off every month. My money can work for me during that month.

Blue_Thunder posted...

It's generally a trap that ensnares the poor and financially illiterate.

Very much this.

I once knew a guy who used one of these schemes to get a PS3, and he just couldnt understand that in total it was costing him 900, just for the console. He just kept coming back with, No, its costing me 30 a week.

josh posted...

Only people in real life I've seen complain about credit cards are muslim. I think there's arguments for and against it being haram, obviously the ones against it rationalize that you don't need one anyway.

tbh the problem I have with this is anyone can use their religious beliefs to be against OR justify anything, which is why religion and social matters should be separate

pedro45 posted...

Blind hate for credit cards is weird. Over the course of a year, I earn like half a week's pay and i don't pay any fees.

They're fine if used responsibly, but it's *really* easy to slip into using them irresponsibly. Studies have found that people tend to be comfortable spending more with credit than with debit or cash, sometimes as much as a 100% increase. Intellectually, there shouldn't be a difference, but that extra layer of abstraction takes away a lot of the feel of spending money, and removing barriers to spending always helps get people more comfortable with doing so such that they need to put that extra bit of conscious thought in to regulate their spending. Any time you introduce a need for customers to exercise conscious thought to protect themselves from poor spending decisions, you're going to get customers who don't exercise that conscious thought (whether because they're bad with money or just as a momentary lapse of judgement) making poor spending decisions, to your benefit. This is why so many credit options exist.

Personally, I'm with you. In the 10+ years I've been using credit cards for almost every purchase (I use debit for small businesses because the fees tend to be lower, but that's about it), I think I've paid a grand total of 70 cents in interest because I forgot to pay off like $50 before the payment deadline, and I've earned significantly more than 70 cents in rewards. I had to take advantage of my line of credit to do some debt restructuring due to moving expenses last year, which I'd otherwise have had to pay CC interest on, but that was a matter of temporarily going into CC debt knowing that I had that restructuring option to reduce my interest payments (I ended up paying like ~$10 a month for 3-4 months instead of ~$50) and that I'd have it paid down within a couple months once my girlfriend started the job we moved for and started making quite a bit more than she had been. That's very different from using a CC to spend more than I have and hoping to make enough to pay it down before the bill comes in.

I'm also good with money, though. I've got a head for numbers and tend to be quite frugal whenever I've got the option, all of which amounts to a pretty substantial advantage in that regard. Many people cannot claim that, and credit cards can be risky for them.

Damn_Underscore posted...

tbh the problem I have with this is anyone can use their religious beliefs to be against OR justify anything, which is why religion and social matters should be separate

I agree that religion has no place in dictating what a society should or shouldnt tolerate, but I also think that the notion that its mostly Muslims who are anti-credit card is nonsense.

I dont have a credit card and Im not a Muslim.

Its a tool. Access to tools is good. A hammer is not bad, because someone may be dumb and hammer their thumb.