'Buy now, pay later' lenders pitch loans for needs like electricity and rent

For those in other countries wondering how the U.S. has sustained fifty years of household wage deflation and corporate profit inflation — it’s by issuing sequential waves of lower and lower ‘quality’ consumer credit (such as the subprime tranches popularized by the Big Short). That they’ve reached the point where they’re targeting advertising of grocery debt towards the half of the country’s population that could not afford food, medicine, and shelter without debt suggests that we’re nearing the limits of what the latest wave can solve. There certainly isn’t much runway left if they’re down to loans for utilities. So, the underlying question raised by this for me is:

What will happen to the workforce when BNPL debt runs out?

I can sort of understand using BNPL for seasonal purchases like Christmas gifts, to spread the payments over time. But using them to pay for utilities or rent seems like a colossally bad idea.

In general, I don't favor regulation of loan products, on the notion that people should be free to get loans that fit their circumstances. But I wouldn't be opposed to limiting BNPL loans so they are not available for purchases that are (1) large dollar value and (2) recurring. Or there could be PSAs to warn people about them.

And regardless, they should be teaching kids about money management and the consequences of BNPL in school. There should be plenty of time now that kids aren't learning about "balancing their checkbook".

For a while, I volunteered with a social services agency that had a deal with the power company where we could directly cover electric bills for people who were in danger of being disconnected. Nobody wants to lose their electrical power; in the desert it's kind of essential to keep the A/C and refrigerator going.

I got a dismal bird's eye view of the situation. In order to help anyone, we were required to collect various types of information from them. Any financial help is usually subject to a lot of paperwork and a lot of disclosure. Many people are reluctant/uncomfortable with this kind of scrutiny, especially if they are living in the shadows for any reason.

So my job on this side involved going down our list, and telephoning each household to try and get that information from them. I didn't work on this long, but very diligently I tell you, and I kid you not, I had a 99% failure rate. I was calling during the work hours of the weekdays, and we could practically never reach anyone at home. And that is totally understandable, if you were up against indigent people trying to save their household, and consider they were either at work, looking for work, or traveling around trying to get this kind of assistance in person.

Sadly in 2026, I would say that more people than ever before are leaning on social services to get the food they need, and pay their rent/utilities, because it's totally obvious that many families are failing in this regard, being displaced, and the homeless/on-the-streets population is still growing. Therefore I am unsurprised that BNPL and payday or title loan schemes are putting people into debt this way.

It was dismaying to me that charitable help was being offered but unattainable, due to simple missed phone calls.

At its peak powers, the CFPB aggressively regulated payday lenders.

Before someone argues about free markets, the CFPB also helped remove long outstanding medical debts below $500 out of consumer reports helping an estimated 23M American consumers - a perfect example of increase regulations on the bad, increase access for the poor.

Then everything includes itself in power, Power into will, will into appetite; And appetite, a universal wolf, So doubly seconded with will and usury, Must make perforce a universal prey, And last eat up himself.

I feel like this has already been a thing, at least in the US. In aldi, there is a popup when paying that asks if I want to bnpl.

Payday loan places already do this. It's pure exploitation of the poor.

   Banks varied in their philosophy of interest rates, minimum monthly payments, and so on. None of that mattered to Bud. What mattered was what they would do to him if he got into arrears, and so after he had allowed a decent interval to pass pretending to listen very carefully to all this crap about interest rates, he inquired, in an offhanded way, like it was an afterthought, about their collection policy. The banker glanced out the window like he hadn't noticed.
   The soundtrack segued into some kind of a cool jazz number and a scene of a multicultural crew of ladies and gentlemen, not looking much like degraded credit abusers at all, sitting around a table assembling chunky pieces of ethnic jewelry by hand. They were having a good time too, sipping tea and exchanging lively banter. Sipping too much tea, to Bud's suspicious eye, so opaque to so many things yet so keen to the tactics of media manipulation. They were making rather a big deal out of the tea.
   He noted with approval that they were wearing normal clothes, not uniforms, and that men and women were allowed to mingle. "Peacock Bank supports a global network of clean, safe, and commodious workhouses, so if unforeseen circumstances should befall you during our relationship, or if you should inadvertently anticipate your means, you can rely on being housed close to home while you and the bank resolve any difficulties. Inmates in Peacock Bank workhouses enjoy private beds and in some cases private rooms. Naturally your children can remain with you for the duration of your visit. Working conditions are among the best in the industry, and the high added-value content of our folk jewelry operation means that, no matter the extent of your difficulties, your situation will be happily resolved in practically no time."
   "What's the, uh, strategy for making sure people actually, you know, show up when they're supposed to show up?" Bud said. At this point the banker lost interest in the proceedings, straightened up, strolled around his desk, and sat down, staring out the window across the water toward Pudong and Shanghai. "That detail is not covered in the brochure," he said, "as most of our prospective customers do not share your diligent attention to detail insofar as that aspect of the arrangement is concerned."
   He exhaled through his nose, like a man eager not to smell something, and adjusted his goatee one time. "The enforcement regime consists of three phases. We have pleasant names for them, of course, but you might think of them, respectively, as: one, a polite reminder; two, well in excess of your pain threshold; three, spectacularly fatal."
   Bud thought about showing this Parsi the meaning of fatal right then and there, but as a bank, the guy probably had pretty good security. Besides, it was pretty standard policy, and Bud was actually kind of glad the guy'd given it to him straight. "Okay, well, I'll get back to you," he said. "Mind if I keep the brochure?"
   The Parsi waved him and the brochure away. Bud took to the streets again in search of cash on easier terms.

Neal Stephenson, The Diamond Age