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.

  • Todd Bonzalez@lemm.ee
    114·
    24 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.