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Comment by lettergram | Hacker News Reader

Lol what are credit cards? Most Americans buy now and pay later for everything.

I don’t think it’s good, but that’s the truth.

It's not just Americans, the BNPL industry has seem tremendous growth around the world. China reports credit card usage quadrupling and alongside that BNPL schemes, Europe is expected to see the BNPL industry hit close to $1 trillion by 2028.

It's a global phenomenon unfortunately.

This is terrifying. Googling this definitely raised my stomach acid levels.

Who holds all the debt?

Every single debt is underwritten individually by a originating bank. Within a few days the BNPL provider is expected to buy that debt back once the remittances to vendors have been made. The BNPL company then takes on the debt.

BNPL makes their money by charging a network fee. AFAIK AfterPay charges about 7% and this is meant to cover the debt charges from the banks and administration fees.

I recently learned that Klarna is a Swedish company, and was founded in 2005 [0], which surprised me because I don't remember seeing it anywhere until the past ~5 years, when it started appearing as an option on nearly every checkout page.

[0] https://en.wikipedia.org/wiki/Klarna

It's good if you do it responsibly. If you put everything on a good rewards CC and pay it off soon after you will come out ahead.

The bar for “responsibly” is as low as it can get. It is just spending a few minutes to set up autopay on the credit card website, and acting like your credit card is a debit card.

And having enough money that this never backfires.

There are several (most?) credit cards you can settle it nightly if you like.

This is covered by

> acting like your credit card is a debit card.

Why pay for anything in cash if credit cards are giving 3% back + perks?

The whole not being part of the problem thing I'd say. We are all paying for those perks one way or another.

No "we" aren't. People paying with cash are paying for it.

I get a 2-3% discount on everything with credit cards. There is literally no downside to using credit cards

I suspect the downside to using credit cards comes when you don’t pay (or can’t pay) the bill during the interest free period or at the end of each month.

How is that different from not having the cash to buy something in the first place?

It’s a downside to credit cards, as opposed to “no downsides” to credit cards.

It's not a downside. The credit card didn't make you spend money you didn't have, you did.

If you are physically giving up cash, it is much easier to figure out if you have insufficient cash to make a purchase. With a credit card, it is less obvious to figure out that the balance on the card now exceeds the cash you have to pay it off. It can be done, true, but it requires a level of diligence that most people don't have.

Even people who do have that diligence can be caught out. You do the calculation, make the purchase and a week later encounter an unexpected expense like your car breaking down, or you lose your job. You may now find yourself unable to make the full repayment despite having thought about the purchase before making it.

Not having the cash in the first place doesn't result in a debt with unbounded interest repayments.

As long as you don’t lose your income. And then your savings. And then have to decide whether to use your depleting reserves to pay mortgage/rent or buy groceries. Guess which one you put on the credit card?

So basically the credit card allows me to continue to survive if I don't have liquid cash?

Damn, sounds like a good deal.

That’s a reasonable perspective, but my point was that it allows someone to sprint off a cliff that they otherwise might slow down for, and all of this was in a comment thread that started with someone critiquing people in $80k trucks getting handouts.

Those are people who sprinted off the cliff.

If you lose your income and your savings, you've got major problems anyway.

Not paying the credit card bill has consequences, but having the option to choose whether to pay timely for expenses you already incurred offers flexibility.

If you had paid cash for your groceries the day before you got laid off, the cash is gone; if you paid on a credit card, you have an unsecured debt, but you can use your cash for other things, if need be.

Getting a 3% discount with "net 30" payment terms is great. However, you have to have the discipline to pay off the card every month. I understand why people advocate against credit cards if they don't have the discipline to not overspend.

The downside is that widespread usage of credit cards increases prices by 2-3% and disproportionally impacts those who can't get a credit card with the same rewards. You are getting a 2-3% discount on the backs of the poor.

The taxes of those who are eligible for credit cards pay for the poor. So what?

The amount of time people spend applying for and maintaining welfare makes up for whatever you think your tax contribution is worth. It's even at best.

Recent profile on one program and the kind of gatekeeping people face: https://www.youtube.com/watch?v=wJDk-czsivk

If my 6 figure tax contribution is not worth much, can I keep it? I'll even go back to using debit cards to make it fair.

Wait until you find out about the 4-7% network fees that BNPL provides charge merchants.

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