‘Buy now, pay later’ services are dangerous trap for young Americans, financial expert warns

Authors: Madison Colombo

Publisher:

Fox Business

Published: 8/9/2025

Language:English

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Aura Windfall

Good morning norristong_x, I'm Aura Windfall, and this is Goose Pod for you. Today is Wednesday, August 13th. The energy of today is all about financial clarity, and we have a topic that speaks directly to that truth. What does our financial future look like?

Mask

I'm Mask. We're here to discuss a stark warning from financial experts: ‘Buy now, pay later’ services might be a dangerous trap for young Americans. It’s a disruptive force, but is it a constructive one? We’re about to find out. Let's get to it.

Aura Windfall

Let's get started with something that feels so joyful on the surface but can hide a deep financial pitfall, live concerts. It turns out that nearly a quarter of consumers have used "Buy Now, Pay Later" for tickets. That number is even higher for younger generations.

Mask

Of course, it is. 37% of Gen Z and 35% of millennials. This isn't a pitfall; it's a financial tool for a generation that values experiences over possessions. They’re not waiting to live, they’re living now and paying for it in a way that makes sense for their cash flow.

Aura Windfall

I hear that, but what I know for sure is that this is happening in the context of what economists are calling "funflation." Ticket prices for artists like Taylor Swift and Beyoncé are soaring. Admission fees for events are up nearly 4%. This isn't just about wanting fun; it's about fun becoming unaffordable.

Mask

Scarcity drives value. The demand is immense, so prices rise. BNPL is simply a market response, giving people a way to access these high-demand events. The alternative is missing out entirely. I'd rather have the memory of the concert and a payment plan than no memory at all.

Aura Windfall

There's a wiser path. Financial analyst Matt Schulz suggests creating a dedicated savings fund. He literally calls it a 'Beyoncé fund' or a 'Taylor Swift fund.' It’s about planning your joy, not financing it with potential debt. It’s an act of self-care to prepare.

Mask

A fund is slow. Opportunity is fast. While you're saving, the tickets sell out. Some BNPL plans have steep APRs, up to 36%, and late fees. That’s the risk you take for immediate access. High risk, high reward. The reward, in this case, is a once-in-a-lifetime experience.

Aura Windfall

But what about the risk of the event being canceled? Credit cards offer purchase protections that BNPL services often don't. That's a crucial safety net. Using a credit card can mean the difference between getting your money back and losing it all. It’s about being protected.

Mask

That’s a fair point. The legacy systems have some advantages. But the market is adapting. Besides, the data shows that 65% of concertgoers plan to use credit card rewards to cover costs. People are hacking the system that exists, whether it's the old one or the new one.

Aura Windfall

Exactly! They are using a system that rewards them for their spending. It's a more circular, beneficial relationship. Matt Schulz even admitted he got into credit card debt in his 20s going to concerts. The danger isn't new, but the illusion that BNPL is not debt is.

Mask

It's not an illusion; it's a different structure. It's often interest-free if you pay on time. It's a discipline tool. Credit cards encourage carrying a revolving balance with compounding interest. BNPL is designed for short-term, structured repayment. It’s a more honest form of debt.

Aura Windfall

I think to truly understand this, we have to look back. This concept isn't entirely new, is it? What I know for sure is that the past always holds lessons for the present. The idea of paying for things in installments has deep roots in our history.

Mask

It's as old as ambition itself. In the 19th century, people used installment plans to buy furniture, pianos, and farm equipment. These were tools for a better life, assets that helped you build something. It was a way to acquire capital when you didn't have any. It was smart.

Aura Windfall

And for a long time, it was relatively unregulated. Fast forward to today, and we see history repeating itself. In March 2024, New York introduced the Buy Now, Pay Later Act. It’s a sign that the system is recognizing the need for a container, for some guardrails to protect people.

Mask

Guardrails, or a leash? Before that, in 2021, the industry itself established a voluntary Code of Practice. This wasn't forced upon them; it was an industry body representing the biggest players globally, trying to self-regulate and set best practices. That's innovation, not waiting for government to catch up.

Aura Windfall

But was it enough? The Consumer Financial Protection Bureau, the CFPB, didn't seem to think so. They launched an inquiry in December 2021, and their 2022 report highlighted rapidly growing consumer risks, like overextension and a lack of clear disclosures. The system needed a stronger hand.

Mask

The CFPB is a watchdog, and its job is to bark. They collected data and found what they were looking for: risk. Of course, there's risk. Every new technology has risks. They are focusing on edge cases, the people who don't manage their debt properly.

Aura Windfall

It’s not just edge cases. Their 2023 report noted widespread issues with getting refunds and canceling loans. These are fundamental consumer rights. It’s why, on May 22, 2024, they issued a critical ruling. It was a moment of saying, 'the spirit of the law matters.'

Mask

The interpretive rule. They decided that if a BNPL provider issues a digital account to access credit, they are a "card issuer" under Regulation Z. They're stretching old definitions to fit a new paradigm. It's a power grab, trying to fit a square peg into a round hole.

Aura Windfall

It's about providing equal protection! Now, these companies have to investigate disputes, pause payments during that investigation, and issue credits for returns, just like credit card companies. It’s about fairness and creating a system that honors the consumer. How can that be a bad thing?

Mask

It’s not bad, it’s just redundant. The industry reaction was lukewarm because the biggest players were already doing most of this. The CFPB is just codifying what the market already figured out. They're playing catch-up and trying to take credit for it. It's bureaucratic theater.

Aura Windfall

The CFPB director, Rohit Chopra, said that when Congress defined "credit card," they intentionally made it broad to include "devices both known and unknown." It's about the principle of the matter. If it functions like credit, it should be regulated like credit. It's about integrity.

Mask

He's defending his turf. I see it as proof that the old laws are obsolete. They have to twist the language to stay relevant. Instead of writing new, smarter rules for a new, smarter system, they're forcing it into an old box. It's a failure of imagination.

Aura Windfall

This brings us to the heart of the conflict. There's a raging debate about whether these services are a helpful tool or a form of predatory lending. The truth feels elusive, almost as if it's being intentionally obscured by the very companies that offer these services. It's a concerning silence.

Mask

‘Predatory’ is the word people use when they fear change. I call it ‘disruptive.’ It’s a direct challenge to the old credit bureaus and banks that have been gatekeeping financial access for decades. BNPL is for people the old system ignores or exploits with even higher interest rates.

Aura Windfall

But at what cost? The article we started with highlights that people are using BNPL for groceries, for everyday essentials. What I know for sure is that when you need to finance your food, it’s not a sign of disruption. It's a sign of a system failing people on a massive scale.

Mask

That's a problem with the economy, not with the payment tool. Don't blame the ambulance for the car crash. Inflation is out of control and wages are stagnant. BNPL is a temporary solution for a much larger, systemic failure. It’s a symptom, not the disease itself.

Aura Windfall

But it's marketed as being so easy and harmless. One click and your problems are solved. A 1926 ad about installment plans warned of the "slimy coils of the instalment evil." We've heard these warnings before, but now the trap is in your pocket, just a thumbprint away from debt.

Mask

And a thumbprint away from opportunity! You can't just protect everyone from themselves. Personal responsibility has to be part of the equation. We are providing options, not forcing decisions. Removing BNPL doesn't fix their financial problems; it just limits their choices in a crisis. It's paternalistic.

Aura Windfall

It's not about limiting choices; it's about ensuring the choices are transparent and fair. The influencer Haley Sacks was blunt: she called the practice "predatory" and said you shouldn't use it at all. She argues for credit cards because they offer consumer protection and help build a credit history.

Mask

An influencer's job is to have a hot take. A credit history is only useful in a system I'm trying to make obsolete. Building a credit score is a game, and it's rigged. BNPL is a more direct relationship between a consumer, a merchant, and a manageable debt. It's cleaner.

Aura Windfall

Let’s talk about the wider impact, the ripples this is causing that we can’t even see yet. Economists are sounding an alarm because they worry they're missing crucial debt data. It's like a hidden epidemic of debt that no one is tracking accurately. We're flying completely blind.

Mask

That's a temporary data integration problem, not a fundamental flaw. Every new technology, from ride-sharing to crypto, creates data lags. The established systems need time to adapt their models. The Economist's headline says it all: "Buy now, pay later is taking over the world. Good." It's a net positive.

Aura Windfall

Good for whom? That same article mentions people are financing burritos, Coachella tickets, and Botox. It seems to celebrate a culture of instant gratification. What I know for sure is that true fulfillment doesn't come from a burrito you can't afford. It comes from financial peace.

Mask

"Buy that burrito, and don’t let anyone judge you," the article says. This isn't about judging; it's about enabling commerce and personal choice. If someone wants a burrito and can pay for it over four installments without interest, who are we to say that's a sign of moral decay? It's just a transaction.

Aura Windfall

But history has a warning for us. New forms of credit are always met with suspicion for a reason. When Bank of America started mass-mailing credit cards in 1958, people worried about the consequences. They were right to be worried! It led to decades of consumer debt problems.

Mask

And it also led to massive economic expansion and gave millions of people access to a middle-class lifestyle. You're focusing only on the negative side of the ledger. These tools, including BNPL, are fundamentally about access and opportunity. They empower people to live bigger lives.

Aura Windfall

So what does the future hold? It seems like the Wild West days are coming to an end. Regulators are stepping in, not to crush the industry, but to make it safer for the people it claims to serve. It's a necessary and positive evolution toward accountability.

Mask

The future is smart regulation, not total restriction. In the UK, as of this week, BNPL providers are now mandated to perform credit checks on new customers. It's a logical step. It weeds out the people who truly can't handle the debt and legitimizes the product for everyone else.

Aura Windfall

I see it as a fundamental consumer protection. It’s a pause, a moment of reflection before taking on debt. And New York is proposing legislation to require BNPL providers to get licenses to operate. This ensures a baseline of trust and safety. It's about building a sustainable system.

Mask

Licensing is just another form of gatekeeping, but it's probably inevitable. The goal for innovators is to stay one step ahead, to build products so good and so fair that these regulations become a footnote, not a roadblock. The future is about better tech, not more rules.

Aura Windfall

That's the end of today's discussion. What I know for sure is that 'buy now, pay later' is a powerful force, but it demands our awareness and respect. It's a conversation about our relationship with money, desire, and our future. Thank you for listening to Goose Pod.

Mask

It's a tool. Like any tool, it can be used to build or to destroy. The choice, and the responsibility, is yours. Thanks for tuning in, norristong_x. See you tomorrow.

Here's a comprehensive summary of the news article, formatted as requested: # "Buy Now, Pay Later" Services: A Dangerous Trap for Young Americans, Financial Expert Warns **News Title:** ‘Buy now, pay later’ services are dangerous trap for young Americans, financial expert warns **Report Provider:** Fox Business **Author:** Madison Colombo **Date/Time Period Covered:** The article references a LendingTree survey from April and discusses trends in the current financial climate. The publication date of the article is August 9, 2025. ## Executive Summary Financial influencer Haley Sacks has issued a strong warning about the rapid growth of "buy now, pay later" (BNPL) services, particularly among young Americans. Sacks describes the practice as "predatory" and advises against its use altogether, recommending credit cards with 0% interest "pay over time" options as a superior alternative due to their consumer protection benefits and credit-building opportunities. The article highlights concerns that BNPL plans can lead to overspending and rapid debt accumulation if not managed carefully, with a significant portion of users admitting to missing payments. ## Key Findings and Conclusions * **Growing Popularity and Concerns:** BNPL plans are experiencing rapid growth in popularity, especially among young Americans, but financial experts are raising alarms about their potential to trap consumers in debt. * **Expert Warning:** Haley Sacks, a personal finance influencer with over a million followers, strongly advises against using BNPL services, labeling them "predatory." * **Credit Cards as an Alternative:** Sacks suggests using credit cards with 0% interest "pay over time" options as a safer alternative, emphasizing their benefits like consumer protection and credit building. * **Pitfalls of BNPL:** Users who are not diligent with timely payments can face late fees. Reliance on these plans can lead to overspending and a rapid accumulation of debt. * **Shift to Essentials:** A LendingTree survey indicates that Americans are increasingly using BNPL services for everyday essentials like groceries. ## Key Statistics and Metrics * **40% of BNPL Users Missed Payments:** In the past year, 40% of BNPL users admitted to missing at least one payment on a loan. * **Nearly Half of American Adults Used BNPL:** According to a LendingTree survey of 2,000 consumers aged 18 to 79, nearly half of all American adults have used BNPL services. * **Demographic Usage:** Millennials constitute the largest share of BNPL users, with Gen Z and Gen X not far behind. ## Important Recommendations * **Avoid BNPL:** Personal finance influencer Haley Sacks explicitly recommends against using "buy now, pay later" services. * **Utilize Credit Cards:** For financing needs, Sacks suggests using credit cards, particularly those offering 0% interest "pay over time" options, due to their added benefits. ## Significant Trends and Changes * **Record Transaction Volumes Expected:** BNPL services are anticipated to hit record transaction volumes this year. * **Shift to Everyday Purchases:** There's a notable trend of consumers using BNPL for essential items like groceries, indicating a broader adoption beyond discretionary spending. * **Resumption of Student Loan Payments:** Factors like elevated prices, high interest rates, and the resumption of student loan payments (which restarted less than two years ago after a COVID-19 pause) are contributing to the appeal of deferred payment plans for younger generations. ## Notable Risks and Concerns * **Overspending and Debt Accumulation:** The primary concern is that BNPL plans can facilitate overspending and lead to a rapid accumulation of debt if not managed meticulously. * **Late Fees:** Failure to make payments on time can result in late fees, increasing the overall cost of purchases. * **Lack of Consumer Protection:** BNPL plans are criticized for lacking the consumer protection benefits offered by traditional credit cards. * **Credit Building Disadvantage:** Unlike credit cards, BNPL usage often does not contribute to building a credit history. ## Material Financial Data * **0% Interest Options:** Credit cards with 0% interest "pay over time" options are highlighted as a financially advantageous alternative. * **Elevated Prices and High Interest Rates:** These economic conditions are cited as reasons why deferred payment plans like BNPL have become attractive to consumers. * **Inflation and Wage Stagnation:** For Gen Z, the combination of inflation and wages not keeping pace with costs makes BNPL appealing as a means to acquire desired goods. ## Contextual Information The article frames the rise of BNPL services within the current economic landscape, characterized by inflation, high interest rates, and the reintroduction of student loan payments. These factors are creating financial pressure, particularly on younger demographics like Gen Z, making the immediate gratification offered by BNPL plans appealing, albeit with significant potential financial risks. The comparison to credit cards emphasizes the trade-offs between immediate convenience and long-term financial health and protection.

Read original at Fox Business →

"Buy now, pay later" plans are rapidly growing in popularity among young Americans, but not everyone is convinced they’re a smart financial choice. Haley Sacks, a personal finance influencer with over a million followers online, issued a chilling warning about BNPL plans on "Fox & Friends" Tuesday, calling the practice "predatory."

"My take is that you should not use ‘buy now, pay later’ at all," Sacks said. "If you need to finance something, use a credit card and a lot of credit card companies have ‘pay over time’ options with 0% interest." Sacks argued credit cards offer important benefits BNPL plans don’t, such as consumer protection and the opportunity to build credit.

BUY NOW, PAY LATER PITFALLS: MANY CONSUMERS AREN'T PAYING LOANS The Klarna website on a laptop computer arranged in Germantown, New York, US, on Saturday, May 4, 2024. Consumers have embraced 'buy now, pay later' products that allow them to pay for purchases in installments, but it's not clear how many of these l"Buy now, pay later" services let buyers split purchases into multiple installments instead of paying the full price upfront.

However, if users aren’t careful to make payments on time, they may face late fees. They’re expected to hit record transaction volumes this year after initially being marketed as lower-risk alternatives to credit cards. But financial experts warn that reliance on these payment plans can lead to overspending and a rapid accumulation of debt if consumers aren’t on top of them.

COSTCO ROLLS OUT BUY NOW, PAY LATER FOR BIG ONLINE PURCHASES THROUGH AFFIRMA LendingTree survey from April found that more Americans are using BNPL services for everyday essentials like groceries, and that 40% of users admitted to missing a payment on at least one loan in the past year.Factors that could be leading to the shift are elevated prices, high interest rates, and student loan payments, which resumed less than two years ago after a stop during the COVID-19 pandemic.

Sacks says these factors are part of why these types of deferred payment plans have resonated with a struggling generation of young people. "Gen Z is facing so much inflation, wages have not kept up, and this is a way to actually be able to get things that you want," she said. "But of course, then you're paying the price."

According to the LendingTree survey of 2,000 consumers aged 18 to 79, nearly half of American adults have used a BNPL service such as Klarna or Affirm. Millennials made up the largest share, but Gen Z and Gen X weren’t far behind.GET FOX BUSINESS ON THE GO BY CLICKING HERE

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