Buy-Now-Pay-Later Services Are Putting Millennials into Debt

According to a recent feature from GQ, the rise of “millennial-friendly creditors” such as Afterpay, Affirm, and Sezzle are basically putting an entire generation into debt.

As author, Cam Wolf, explains, “a number of platforms that have sprouted up over the past couple years that are willing to float customers a couple hundred or thousand dollars to shop [and] are positioned as a more consumer-friendly option than credit cards.”

And through these platforms, more than 7 million customers have been allowed to take on micro-loans to purchase apparel they otherwise might not have bought. From a consumer empowerment perspective, it’s cool. From a sales perspective, it’s a Godsend (“on average, retailers see a 20 to 50 percent uplift in average order values”). From a debt perspective, however…

As Wolf writes, Afterpay — the most successful of the bunch – is “at best, a platform that allows you to take out what amounts to a small loan on an item.” But at worst, it’s “leveraging millennials’ distrust of traditional credit card companies to sell them a product that can lead them down the same financially destructive road.”

“For many, the end result is the same: debt, just with a sleek millennial-friendly interface.”

But, as Wolf adds, “entering vicious cycles of debt is a time-honored American tradition as old as getting caught up in stupid wars,” which now a whole new generation is getting to experience it.

“Millennials are more in debt than any generation before it… Wages have stagnated, stable job opportunities have dissolved to gig-economy ones. Meanwhile, the prices on the things we need to live and thrive—education, housing, and health care—are shooting up,” Wolf writes. “The breed of purchases that buy-now-pay-later services enable are salves, short-term floods of endorphins meant to ward off the bad financial feelings most millennials are faced with.”

You can read more about it at GQ.

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