704
EconomicsELI5 How do companies like Klarna and Afterpay make money without charging interest?(self.explainlikeimfive)
I see these companies offering installment payment options for online purchases but they don't charg...
2 months, 3 weeks ago
—
6 months, 3 weeks ago9 of 9
Tip Reveddit Real-Time can notify you when your content is removed.
your account history
Tip Check if your account has any removed comments.
view my removed comments you are viewing a single comment's thread.
view all comments
So it's just a credit card with no rewards?
I work (somewhat indirectly) in this industry and yes, the internal discussion is that BNPL is the “new” version of the credit card for Gen Z. It allows you to buy using payments without a real credit history, without annual fees, etc, while still allowing the merchant to make the sale on something that might otherwise not have been within reach to that buyer.
It’s a little gross, but I’m conflicted because I feel like credit cards are already predatory so anyone threatening their model might be a good thing.
Credit card rewards are pretty much scam anyway to try to get people to use them more than they should.
I disagree with them being a scam to incentivise people to spend more than they normally would. They definitely incentivise you to pay with a CC over cash or a debit card, but I've never felt like I should go spend more money in order to get CC rewards lol
Statistically, people spen more with a card than with cash. You feel the price less when you don't see anything physically leave you. It's one of the selling points of credit cards to businesses.
Maybe you don't because you're actually financially responsible. There are many people out there who aren't and get taken advantage of by these offers because they think they are actually getting a good deal. But really a $2 return on a $100 loan with 10% interest is just a $100 loan at 8% interest which is essentially what these rewards programs are when you break down the math. Many people can't control their CC spending habits and that's where these companies offering these easy to get loan make their money.
This thread is full of such nonsense.
For the financially illiterate. For financially literate they’re super dope
not really credit… more like lay a way but you get the merchandise first