The Buy Now, Broke Later Crisis (This is Bad)
Published: 2025-09-02
Status:
Available
|
Analyzed
Published: 2025-09-02
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
As of 2025, nearly 50% of US consumers have used a BNPL service.
"as of 2025, almost half of US consumers have used a BNPL service like CLA, Afterpay, or Affirm at least once."
Correct
64% of Gen Z consumers have used a BNPL service.
"Now, among Gen Z, that number is even worse. It's 64%."
Correct
In 2025, 25% of BNPL users utilized the service for grocery shopping.
"In fact, 25% of BNPL users in 2025 admitted they use it for food shopping."
Correct
In the current year (presumably 2025 based on context), 41% of BNPL users made at least one late payment.
"This year alone, 41% of users said they paid late at least once, which is almost half of everyone using these services."
Correct
BNPL transaction volume has increased 20-fold since 2019.
"The transaction volume alone has multiplied 20 times since 2019."
Correct
BNPL fees charged to merchants can range from 2% to 8%, significantly higher than the 2% charged for typical credit cards.
"It can be anywhere between 2 to 8% of the purchase price. And that's compared to just 2% for a normal credit card."
Correct
BNPL services are offering longer-term plans (6-12 months) with interest rates potentially reaching 30% APR.
"you can sometimes choose 6 or 12 months. And those do come with interest rates that can be as high as 30% APR depending on your credit."
Correct
Certain BNPL providers may charge late fees up to 25% of the purchase price.
"Some providers actually have late fees that can go up to 25% of your purchase price."
Correct
On average, BNPL users have 3 to 4 active loans concurrently.
"the Consumer Financial Protection Bureau found that on average, users have three to four active loans at the same time."
Correct
The majority of BNPL companies do not report on-time payments to credit bureaus.
"most BNPL companies do not report your on-time payments to the credit bureaus."
Correct
Missed BNPL payments are reported to credit bureaus, potentially lowering a user's credit score without any benefit gained from on-time payments.
"But if you miss a payment, that does get reported, which means best case scenario, no benefit for your credit score when you're doing what you're supposed to. And the worst case, your score goes down just because you missed a $50 dinner bill."
Correct
BNPL usage can be factored into a borrower's debt-to-income ratio, potentially affecting home loan borrowing limits.
"these services can even be used to assess your borrowing limits on a home loan. That's what's called the DTI or debt to income ratio that they look at."
Correct
Two-thirds of BNPL users possess subprime or deep subprime credit scores.
"2/3 of the people using BNPL services had quote subprime or deep subprime credit scores."
Correct
Klarna experienced a 17% year-over-year increase in credit losses.
"Clara reported a 17% increase in credit losses from the year before."
Pending
The percentage of BNPL users with late payments rose from 34% last year to at least 41% this year.
"at least 41% of BNPL users had a late payment, which was up from 34% last year."
Correct
The speaker predicts the next recession will be driven by subprime consumer debt, specifically referencing 'subprime cheeseburger loans' as a metaphor for widespread small-ticket consumer debt, implying BNPL could be a contributing factor.
"The next recession won't be coming from student loans or subprime mortgages. Now, we know the next recession will come from subprime cheeseburger loans."
Pending
The majority of BNPL users are individuals with subprime credit scores who are least able to handle additional debt.
"The reality is the majority of BNPL users already have subprime credit scores, meaning they're the exact people who cannot afford another layer of debt."
Correct
BNPL services are beneficial for retailers looking to increase sales and for investors in the stock market due to their impact on retail performance.
"It's great for retailers that want more people to buy their products and by extension, it's great for people that are invested in the market."
Correct