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Comment by twoodfin | Hacker News Reader

I finance all my burritos: It’s fantastically more convenient than cash, incrementally builds my credit rating, & I capture some of the efficiency surplus via rewards points.

The article makes the point that BNPL packages up almost the same product into a bite-sized, low-risk (for both the borrower and the lender) package, making it available to everyone. Indeed, that does sound like a good thing.

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> incrementally builds my credit rating

Most BNPL plans are not reported to credit agencies and therefore don’t build credit. But “financing” by paying with a credit card and paying the balance in full would build your credit, still with no interest.

> But “financing” by paying with a credit card and paying the balance in full would build your credit, still with no interest.

The person you replied to is doing exactly this.

Aren't most BNPL plans credit cards? How many credit card accounts are floating around out there compared to any other type of plan?

Not cash != credit. I haven’t paid in cash (except for a flee market) in years. Actually I rarely use anything but my phone to pay here in The Netherlands. But the notion that you’d need credit or a creditcard for that is absurd. And I think personal credit generally puts more people into financial trouble than that it helps.

You don't need a credit card for this, in principle. But, given that credit score is a thing in US, and that buying things with a credit card and consistently paying the balance off increases it - but no interest accrues until the end of the cycle - it creates a strong preference for credit cards in practice.

I do agree though that in practice this (pervasive use of credit cards) is one of the major contributors to indebtedness. Because you don't have to pay off that balance entirely, it becomes a psychological trap for too many.

Its not an "efficiency surplus" that you get via rewards it is a monopoly surplus.

Not at all. If merchants wanted to ditch high-fee credit cards and spend the money they save on advertising or lower prices to win back the customers they lose as a result, they could do that tomorrow. Cash and debit cards are available alternatives.

They don’t because it would be a worse use of their $$.

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