Internal data shows member credit card balances are up more than 50% for Gen Z and millennial members since March 2022, when the Fed started raising interest rates.

Summary

Gen Z is increasingly relying on “buy now, pay later” (BNPL) services for holiday shopping, with spending projected to rise 11.4% this year, totaling $18.5 billion.

These services appeal to younger consumers with limited credit histories but can lead to overextension, as they lack centralized reporting and encourage overspending.

Experts warn of accumulating fees, particularly when BNPL plans are tied to credit cards.

With inflation and rising credit card debt already burdening Gen Z, consumer advocates caution that these services may worsen financial instability despite their convenience.

  • 01011@monero.town
    2612·
    19 days ago

    You cannot budget your way out of poverty. “Financial literacy” is just capitalists kicking the can down the road.

    • milicent_bystandr@lemm.ee
      302·
      19 days ago

      It’s not, though. Financial literacy includes things like, not spending money you don’t have. When you take these predatory loans to get goods, you end up more enslaved to the capitalist system and to those who have money to lend.

      Financial literacy is not a cure-all, just like normal literacy doesn’t make you understand Shakespeare.

      • Flying Squid@lemmy.world
        261·
        19 days ago

        And they call them predatory loans for a reason. They are coming to you and they are going to hurt you. But we don’t teach kids this before they get into the adult world and this is the result.

      • captainlezbian@lemmy.world
        5·
        19 days ago

        Yeah, and financial literacy alone may not get you out of poverty, and it definitely won’t get everyone out of poverty, but among those with the possibility of class mobility financial literacy will play a role in where they wind up.

    • Flying Squid@lemmy.world
      121·
      19 days ago

      I think it is highly unlikely that all of the Gen Z people getting these loans came out of a life of poverty.

    • Todd Bonzalez@lemm.ee
      114·
      19 days ago

      You cannot budget your way out of poverty

      That really depends on how you define “poverty”. Traditionally, poverty is determined by a household’s income, family size, and the cost of living where they reside. Since we’re talking about debts here, it seems like “poverty” is being used as shorthand for “being poor”.

      Some people legitimately experience poverty, where their income is simply not sufficient to cover the basic costs of life. Others have an income that could cover all of their needs, but they routinely waste their money on things that they don’t need.

      “Financial literacy” is more than just a capitalist buzzword. There is an element of individual responsibility, and plenty of people shirk that responsibility.

      • Understanding that your daily McGriddle habit is more expensive than cooking your own breakfast every morning
      • Understanding that taking the bus to work will save you big on gas and parking costs.
      • Understanding that every dollar you spend, whether it be credit or debit, is going to be cash that you have to pay eventually.
      • Understanding that putting money in a rainy day fund has a guaranteed reward, while buying lottery tickets does not.
      • Understanding that your money at rest is depreciating in value if it’s not properly invested.
      • Understanding even the most basic aspects of investment. You don’t need to be born with a silver spoon in your mouth to understand how a CD or money market account works. You just need to be motivated enough to talk to the bank and open the right accounts.

      While it is certainly true that our capitalist society has created systems of exploitation that deserve to be condemned, it doesn’t preclude Americans from doing their best to understand that system and protect themselves from it. When I see young people destroying their finances with BNPL apps, I see exploitive financial institutions manipulating young people into taking on debt, but I also see incredibly gullible young people who are clearly not taking the “pay later” part of the deal seriously.