For those in other countries wondering how the U.S. has sustained fifty years of household wage deflation and corporate profit inflation — it’s by issuing sequential waves of lower and lower ‘quality’ consumer credit (such as the subprime tranches popularized by the Big Short). That they’ve reached the point where they’re targeting advertising of grocery debt towards the half of the country’s population that could not afford food, medicine, and shelter without debt suggests that we’re nearing the limits of what the latest wave can solve. There certainly isn’t much runway left if they’re down to loans for utilities. So, the underlying question raised by this for me is:
What will happen to the workforce when BNPL debt runs out?
This is a better version of that chart; the Y-axis is pinned at $0 and it’s quite remarkable to see the year-over-year shift between 2024 and 2025 presented across the full timespan.
If you’d like to explain your position on this and how either chart supports your own viewpoint on what’s going down with BNPL and debt and wages, I’m listening.
I'm just evaluating the claim that household income has deflated for 50 years. So I took the start of the data series at ~60k and compared it against the latest datapoint at ~80k. So I concluded that the data does not support your claim that household incomes have deflated for 50 years. I have no position on how household income influences BNPL.
I can sort of understand using BNPL for seasonal purchases like Christmas gifts, to spread the payments over time. But using them to pay for utilities or rent seems like a colossally bad idea.
In general, I don't favor regulation of loan products, on the notion that people should be free to get loans that fit their circumstances. But I wouldn't be opposed to limiting BNPL loans so they are not available for purchases that are (1) large dollar value and (2) recurring. Or there could be PSAs to warn people about them.
And regardless, they should be teaching kids about money management and the consequences of BNPL in school. There should be plenty of time now that kids aren't learning about "balancing their checkbook".
Saying "people should be free to get loans that fit their circumstances" implies a level of financial literacy that simply does not exist in this country.
You and I might be able to make educated judgments about a loan and its value/consequences, but the vast majority of Americans cannot. We simply don't teach this kind of thing in our schools, and every day innocent people get absolutely taken advantage of.
If the public were capable of accurately judging the utility/risk of a loan, then sure we can say it should be on the individual to make their own choices. But that is just not the reality we live in.
I respect that position, and you're right that not everyone is smart enough to make good choices for themselves. I don't carry a balance on my credit cards, which makes me somewhat smart, but I also don't follow all the subreddits about maximixing credit card points, moving balances from here to there, etc. Some people might look down on me for "leaving money on the table" in that regard. I could probably make a thousand dollars a year if I were more informed/aggressive.
I don't want to look down my nose at people who make decisions that I wouldn't make. They also face very different circumstances. What if someone needs to pay for an unexpected medical bill (which they cannot BNPL) and needs to choose between that and rent? What might look like a dumb choice from the outside might be an exercise in constrained optimization.
I've said that I'm open to BNPL being unavailable for certain transaction types, but I wonder if someone with your opinions would rather have them outlawed entirely?
I see both sides of this argument and am really not sure which side I land on. But I wonder if this fits into things like driving, where hey - done recklessly this is dangerous to yourself and others around you, so we require some level of targeted education (e.g. a license). Then if you choose to be reckless anyway its a bit easier to say "it was your own fault".
I bet you credit providers would even front the cost of such a course, since at the end of the day they're still likely to make that money back no matter what.
I think the part that I struggle with is the hard reality that we are largely _not_ teaching people these practical skills in our education system and then expecting them to not get screwed.
>" implies a level of financial literacy that simply does not exist in this country.
Yeah I get it, looking down your nose at the "median american" is popular in certain filter bubbles.
Everyone getting a short term loan product knows it's a bad idea. They either fall into the category of "I can afford to finance a taxi for my burrito even if it's stupid" or "I know this is unsustainable but if I don't pay for X then Y then Z will happen and that is a guaranteed bad outcome whereas this at least gives me a chance of a good outcome".
> But using them to pay for utilities or rent seems like a colossally bad idea.
You_Dont_Say.gif
As the article mentions, these are probably people who don't have the money in their bank accounts to pay for those things straight away.
Frakk, even at a sane repayment terms (e.g. fixed interest monthly, no steep penalties), it's an interesting way for finance companies to profit from the misery of the leg of the K in the K-shaped economy.
> In general, I don't favor regulation of loan products, on the notion that people should be free to get loans that fit their circumstances. But I wouldn't be opposed to limiting BNPL loans so they are not available for purchases that are (1) large dollar value and (2) recurring. Or there could be PSAs to warn people about them.
Wouldn't general usury laws be able to handle this? I suspect BNPL loans for 1 and 2 would generally involve ruinously high interest rates to account for risk, so as long as there's a cap on consumer-facing loan rates that should limit the risk for BNPL offerings.
Then everything includes itself in power,
Power into will, will into appetite;
And appetite, a universal wolf,
So doubly seconded with will and usury,
Must make perforce a universal prey,
And last eat up himself.
For a while, I volunteered with a social services agency that had a deal with the power company where we could directly cover electric bills for people who were in danger of being disconnected. Nobody wants to lose their electrical power; in the desert it's kind of essential to keep the A/C and refrigerator going.
I got a dismal bird's eye view of the situation. In order to help anyone, we were required to collect various types of information from them. Any financial help is usually subject to a lot of paperwork and a lot of disclosure. Many people are reluctant/uncomfortable with this kind of scrutiny, especially if they are living in the shadows for any reason.
So my job on this side involved going down our list, and telephoning each household to try and get that information from them. I didn't work on this long, but very diligently I tell you, and I kid you not, I had a 99% failure rate. I was calling during the work hours of the weekdays, and we could practically never reach anyone at home. And that is totally understandable, if you were up against indigent people trying to save their household, and consider they were either at work, looking for work, or traveling around trying to get this kind of assistance in person.
Sadly in 2026, I would say that more people than ever before are leaning on social services to get the food they need, and pay their rent/utilities, because it's totally obvious that many families are failing in this regard, being displaced, and the homeless/on-the-streets population is still growing. Therefore I am unsurprised that BNPL and payday or title loan schemes are putting people into debt this way.
It was dismaying to me that charitable help was being offered but unattainable, due to simple missed phone calls.
Banks varied in their philosophy of interest rates, minimum monthly payments, and so on. None of that mattered to Bud. What mattered was what they would do to him if he got into arrears, and so after he had allowed a decent interval to pass pretending to listen very carefully to all this crap about interest rates, he inquired, in an offhanded way, like it was an afterthought, about their collection policy. The banker glanced out the window like he hadn't noticed.
The soundtrack segued into some kind of a cool jazz number and a scene of a multicultural crew of ladies and gentlemen, not looking much like degraded credit abusers at all, sitting around a table assembling chunky pieces of ethnic jewelry by hand. They were having a good time too, sipping tea and exchanging lively banter. Sipping too much tea, to Bud's suspicious eye, so opaque to so many things yet so keen to the tactics of media manipulation. They were making rather a big deal out of the tea.
He noted with approval that they were wearing normal clothes, not uniforms, and that men and women were allowed to mingle. "Peacock Bank supports a global network of clean, safe, and commodious workhouses, so if unforeseen circumstances should befall you during our relationship, or if you should inadvertently anticipate your means, you can rely on being housed close to home while you and the bank resolve any difficulties. Inmates in Peacock Bank workhouses enjoy private beds and in some cases private rooms. Naturally your children can remain with you for the duration of your visit. Working conditions are among the best in the industry, and the high added-value content of our folk jewelry operation means that, no matter the extent of your difficulties, your situation will be happily resolved in practically no time."
"What's the, uh, strategy for making sure people actually, you know, show up when they're supposed to show up?" Bud said. At this point the banker lost interest in the proceedings, straightened up, strolled around his desk, and sat down, staring out the window across the water toward Pudong and Shanghai. "That detail is not covered in the brochure," he said, "as most of our prospective customers do not share your diligent attention to detail insofar as that aspect of the arrangement is concerned."
He exhaled through his nose, like a man eager not to smell something, and adjusted his goatee one time. "The enforcement regime consists of three phases. We have pleasant names for them, of course, but you might think of them, respectively, as: one, a polite reminder; two, well in excess of your pain threshold; three, spectacularly fatal."
Bud thought about showing this Parsi the meaning of fatal right then and there, but as a bank, the guy probably had pretty good security. Besides, it was pretty standard policy, and Bud was actually kind of glad the guy'd given it to him straight. "Okay, well, I'll get back to you," he said. "Mind if I keep the brochure?"
The Parsi waved him and the brochure away. Bud took to the streets again in search of cash on easier terms.
Payday loan places don't know what you're using the cash for. They just give you a cash advance that you can spend on groceries, rent, drugs, or whatever else you want.
BNPL platforms know what you're spending on, and whether it's a one-time expense that you're spreading out, or a rent/utility payment that's going to come due next month as well.
If you have to take a loan to buy food or medicine, you are already at the bottom. Because you need to repay the loan with an interest next month, and you will have even less money left.
There’s something in that about the nature of predators - you don’t actually get mad at the wolf for eating the chicken, it’s what the wolf does, just like eating the worm is what the chicken does and eating your garden fruit is what the deer do. You don’t get mad at the wolf, you either build a fence or you kill the wolf.
For those in other countries wondering how the U.S. has sustained fifty years of household wage deflation and corporate profit inflation — it’s by issuing sequential waves of lower and lower ‘quality’ consumer credit (such as the subprime tranches popularized by the Big Short). That they’ve reached the point where they’re targeting advertising of grocery debt towards the half of the country’s population that could not afford food, medicine, and shelter without debt suggests that we’re nearing the limits of what the latest wave can solve. There certainly isn’t much runway left if they’re down to loans for utilities. So, the underlying question raised by this for me is:
What will happen to the workforce when BNPL debt runs out?
Household income has not deflated.
https://fred.stlouisfed.org/series/MEHOINUSA672N
https://alfred.stlouisfed.org/series?seid=MEHOINUSA672N
This is a better version of that chart; the Y-axis is pinned at $0 and it’s quite remarkable to see the year-over-year shift between 2024 and 2025 presented across the full timespan.
If you’d like to explain your position on this and how either chart supports your own viewpoint on what’s going down with BNPL and debt and wages, I’m listening.
I'm just evaluating the claim that household income has deflated for 50 years. So I took the start of the data series at ~60k and compared it against the latest datapoint at ~80k. So I concluded that the data does not support your claim that household incomes have deflated for 50 years. I have no position on how household income influences BNPL.
I can sort of understand using BNPL for seasonal purchases like Christmas gifts, to spread the payments over time. But using them to pay for utilities or rent seems like a colossally bad idea.
In general, I don't favor regulation of loan products, on the notion that people should be free to get loans that fit their circumstances. But I wouldn't be opposed to limiting BNPL loans so they are not available for purchases that are (1) large dollar value and (2) recurring. Or there could be PSAs to warn people about them.
And regardless, they should be teaching kids about money management and the consequences of BNPL in school. There should be plenty of time now that kids aren't learning about "balancing their checkbook".
Saying "people should be free to get loans that fit their circumstances" implies a level of financial literacy that simply does not exist in this country.
You and I might be able to make educated judgments about a loan and its value/consequences, but the vast majority of Americans cannot. We simply don't teach this kind of thing in our schools, and every day innocent people get absolutely taken advantage of.
If the public were capable of accurately judging the utility/risk of a loan, then sure we can say it should be on the individual to make their own choices. But that is just not the reality we live in.
I respect that position, and you're right that not everyone is smart enough to make good choices for themselves. I don't carry a balance on my credit cards, which makes me somewhat smart, but I also don't follow all the subreddits about maximixing credit card points, moving balances from here to there, etc. Some people might look down on me for "leaving money on the table" in that regard. I could probably make a thousand dollars a year if I were more informed/aggressive.
I don't want to look down my nose at people who make decisions that I wouldn't make. They also face very different circumstances. What if someone needs to pay for an unexpected medical bill (which they cannot BNPL) and needs to choose between that and rent? What might look like a dumb choice from the outside might be an exercise in constrained optimization.
I've said that I'm open to BNPL being unavailable for certain transaction types, but I wonder if someone with your opinions would rather have them outlawed entirely?
I see both sides of this argument and am really not sure which side I land on. But I wonder if this fits into things like driving, where hey - done recklessly this is dangerous to yourself and others around you, so we require some level of targeted education (e.g. a license). Then if you choose to be reckless anyway its a bit easier to say "it was your own fault".
I bet you credit providers would even front the cost of such a course, since at the end of the day they're still likely to make that money back no matter what.
I think the part that I struggle with is the hard reality that we are largely _not_ teaching people these practical skills in our education system and then expecting them to not get screwed.
>" implies a level of financial literacy that simply does not exist in this country.
Yeah I get it, looking down your nose at the "median american" is popular in certain filter bubbles.
Everyone getting a short term loan product knows it's a bad idea. They either fall into the category of "I can afford to finance a taxi for my burrito even if it's stupid" or "I know this is unsustainable but if I don't pay for X then Y then Z will happen and that is a guaranteed bad outcome whereas this at least gives me a chance of a good outcome".
> But using them to pay for utilities or rent seems like a colossally bad idea.
You_Dont_Say.gif
As the article mentions, these are probably people who don't have the money in their bank accounts to pay for those things straight away.
Frakk, even at a sane repayment terms (e.g. fixed interest monthly, no steep penalties), it's an interesting way for finance companies to profit from the misery of the leg of the K in the K-shaped economy.
literally anything that's better than paycheck advance ursery is a win.
> In general, I don't favor regulation of loan products, on the notion that people should be free to get loans that fit their circumstances. But I wouldn't be opposed to limiting BNPL loans so they are not available for purchases that are (1) large dollar value and (2) recurring. Or there could be PSAs to warn people about them.
Wouldn't general usury laws be able to handle this? I suspect BNPL loans for 1 and 2 would generally involve ruinously high interest rates to account for risk, so as long as there's a cap on consumer-facing loan rates that should limit the risk for BNPL offerings.
Then everything includes itself in power, Power into will, will into appetite; And appetite, a universal wolf, So doubly seconded with will and usury, Must make perforce a universal prey, And last eat up himself.
I feel like this has already been a thing, at least in the US. In aldi, there is a popup when paying that asks if I want to bnpl.
For a while, I volunteered with a social services agency that had a deal with the power company where we could directly cover electric bills for people who were in danger of being disconnected. Nobody wants to lose their electrical power; in the desert it's kind of essential to keep the A/C and refrigerator going.
I got a dismal bird's eye view of the situation. In order to help anyone, we were required to collect various types of information from them. Any financial help is usually subject to a lot of paperwork and a lot of disclosure. Many people are reluctant/uncomfortable with this kind of scrutiny, especially if they are living in the shadows for any reason.
So my job on this side involved going down our list, and telephoning each household to try and get that information from them. I didn't work on this long, but very diligently I tell you, and I kid you not, I had a 99% failure rate. I was calling during the work hours of the weekdays, and we could practically never reach anyone at home. And that is totally understandable, if you were up against indigent people trying to save their household, and consider they were either at work, looking for work, or traveling around trying to get this kind of assistance in person.
Sadly in 2026, I would say that more people than ever before are leaning on social services to get the food they need, and pay their rent/utilities, because it's totally obvious that many families are failing in this regard, being displaced, and the homeless/on-the-streets population is still growing. Therefore I am unsurprised that BNPL and payday or title loan schemes are putting people into debt this way.
It was dismaying to me that charitable help was being offered but unattainable, due to simple missed phone calls.
Payday loan places already do this. It's pure exploitation of the poor.
Payday loan places don't know what you're using the cash for. They just give you a cash advance that you can spend on groceries, rent, drugs, or whatever else you want.
BNPL platforms know what you're spending on, and whether it's a one-time expense that you're spreading out, or a rent/utility payment that's going to come due next month as well.
If you have to take a loan to buy food or medicine, you are already at the bottom. Because you need to repay the loan with an interest next month, and you will have even less money left.
It's pure exploitation of the poor.
I wish we'd go back to calling these companies "predatory lenders" instead of "payday loan" or BNPL providers.
There’s something in that about the nature of predators - you don’t actually get mad at the wolf for eating the chicken, it’s what the wolf does, just like eating the worm is what the chicken does and eating your garden fruit is what the deer do. You don’t get mad at the wolf, you either build a fence or you kill the wolf.
Special hell for the ones that incorporate or partner with Native Nations to try to avoid usury law.
(And also, though I don't begrudge them much, also, a special hell for those who offer this up to companies for a cut).