this post was submitted on 02 Jun 2024
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A Boring Dystopia
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"Pay later plans"? Other than credit cards, WTF are you talking about?
Yeah, I have a credit card that pays me back 5% cash on grocery store purchases. It would be stupid NOT to use it, then I pay the card off every pay day.
Groceries + free money.
They’re talking about installment plans through your credit card. You pay a fee to split a charge into monthly installments, usually of your choosing. By paying the monthly installment and the rest of your balance from other charges, you can avoid interest kicking in, even while you owe the full amount. The fee is usually a % of the purchase, like 3% or 1% per month or something.
It can make sense on a large one-time purchase, but it’s weird to do it for frequent purchases like groceries.
My last trip to the grocery store was $600.
I'd consider that a large purchase.
I agree it is, but if you spend that amount regularly, it’d be better to try to reduce your budget, painful as it may be, than to snowball toward ever-increasing payment obligations that match or surpass your monthly total for grocery trips anyway.
These articles make it seem like it’s a routine. If it’s for one-time temporary relief, then that’s another thing.
It wasn't, and never will be, for me. However, I didn't go crazy getting things I don't need. I went out of my way to get the cheaper option on the vast majority of items. Still $600. That's at least once a month. I can see why those less fortunate would have a hard time.
For a time when dealing concurrently with diapers, formula, cat litter, cat food and the cleaning/laundry supplies that come with that was hitting $400-$550 Canadian at Walmart/Food Basics every two weeks or so for awhile, and that was two-three years ago before everything went turbo. Certainly was not buying nice steaks, fancy deli cheeses or the like at that time (nor have been since)
How many people for how long does that feed? Unless you want to starve on ramen noodles every day or eat only rice, I too don't see how you're getting away with less than $100/week per person.
That's a month for two people.
What kind of psychopath only goes to the grocery store once a month?
🙋
How does your produce last that long
Some stuff lasts for a long time, most of the time. Onions, carrots, potatoes, peppers, celery, etc. Leafy stuff lasts a couple weeks at most but usually less. That said, it's obviously not in the best condition by the end, but it is still edible.
And frozen/canned goods, rice, beans, and pasta.
Most groceries only have a shelf life of about a week.
So if you’re only going once a month, either you’re throwing a lot away, or just getting processed, shelf stable stuff that’s in general low on nutrients and overpriced.
Most groceries last longer than what people think. Might want to take a look at my other comment about this.
We spend the same amount for 3 people, 1 is vegetarian. It definitely buys enough meat, veggies, baking supplies and snacks for the kid. No pasta helpers, frozen foods, cookies (make our own), alcohol/soda. No ultra-processed stuff, just a variety of healthy ingredients with spices for each meal.
They could also be talking about Affirm/Klarna/Afterpay. I've seen those advertised as being able to use them that way.
Edit: looking back, that might be the most awkward sentence I've ever written. I shouldn't get on here while I'm drinking.
I can choose with my credit card to designate a purchase over 100 bucks as a pay over time purchase. I don't use it for anything less than 4 digits, but this year we got hammered by 4 4-digit car repairs, a 4-digit tree removal, two surgeries for our dog, and a few other unexpected big expenses. I used it for the car repairs and the dog surgeries because there was a promotion where there was no fee, it just raises the minimum monthly payment, and brought the interest down. I didn't have the cash to pay that many things off at once so I'm using to to pay them down that way at a lower rate.
But you are absolutely right, using pay later plans for small frequent purchases is not great. They might not have a choice though.
I don't think this article is about you
No, but as someone who, you know, buys groceries on the regular, I've never seen the sort of payment plan they're talking about.
Yeah, my Amazon card has that option, so does PayPal, but I haven't seen a grocery store that takes PayPal.
Aldi in the US always gives me the option at checkout to pay later, I've never explored it to find out the fine print
Walmart offers it too. They really are pushing the app lately too which offers a few companies so you can max out one and use another.
I haven't either but knowing how greedy companies can be, I wouldn't be surprised if it was offered somewhere.
As someone who trashed my credit the moment I turned 18, this whole article is bizarre to me. I'm in my 30s now and I still have to pay for (nearly) everything, up front, in full (even cars). I can only use private landlords because no apartment community will approve me. If I can't afford something, I can't buy it. Amazon is the only entity that trusts me with a payment plan, because they're the only ones who don't check your credit score. As long as you pay on time, they don't care; so I always have. That's the only reason why I could afford a TV.
I ended up ranting a bit so feel free to ignore this comment 🫣
It's so shitty too because even if you spent years or even decades paying your bills on time, if you hit a few hard months you are completely fucked. None of these companies, not the government, not even the community gives a shit. Everyone just tells you to apply for food stamps, go to a food bank, apply for section 8, etc etc, without realizing that (at least where I am) they actively vote for and support policies that prevent most people from accessing those things. Not to mention food banks have so much moldy shit it's not worth standing in line for 5+ hours to get nothing edible and then have to go to a different place next week because god forbid you go to the same food bank twice in a month. And then section 8... So many places their waitlists are closed for 10-20 years! If you get accepted during that time you still have to apply, find a participating landlord, and jump through 5,000 hoops before you can even plan to move in somewhere. And don't get me started on healthcare!
My ex destroyed my credit back in 2009. My credit score was in the mid 500s. Fortunately, even though it took a decade, I was able to recover my credit and get it back into the 800s.
Jeez 800s is kind of an amazing bounce back. Good on you!! That took effort for sure.
I'm reading this as a European and have questions... We all know that there is non free money. So, what's the business model? Making you use the card more by giving you "free" money and making the shops pay more to use the payment service, so that the shops then increase the prices, so that you pay the same as before (considering increased prices and cashback), but are now using the payment system a lot more?
Few tricks.
Interest rates if you don't pay off the full amount
Just nitpicking because I enjoy these thoughts:
When the shop increases prices, it has to do it for all the customers, including the ones without credit card. So a part of the cost is offloaded to other types of customers. While credit card customers should see a slight increase in price, it should not be as much as they saved previously. So still a net win for them, at the cost of others.
As others pointed out, the real scheme is probably entirely different.
A lot of smaller businesses charge you extra for using the credit card or something similar.
The bigger businesses don’t do that.
Of course the bigger businesses do. it's rolled into operating costs and is reflected in their pricing.
You just don't end up with a different price differentiated by the transaction method.
Credit card companies make money off selling your spending habits to information brokers.
The business model is depending on card users accumulating interest. So they give you perks to get you to use the card and enough people won't pay it off every month that they'll make all their money back and more.
Klarna etc. It's like a credit card but for people who aren't allowed credit cards, and it doesn't show up on your credit reports.
Which is a terrible idea. Lending limits are so you don't get in over your head, they're not some scam to keep poor people poor. Poor people are already poor. Corporations would cheerfully lend to you until you can pay no more, and then sell you for parts.
Klarna does appear on credit reports, at least here in Australia.
There's two forms.
Some banks offer to split payments on debit purchases after you make the purchase.
Some stores (mostly online) offer it at checkout.
There's no credit checks, and it's easy for the buyer to not realize what's happening.
Every single time you do it, a 3rd party company opens a line of credit for it.
It's like getting a new credit card every time it's used. Which demolishes peoples credit before they realize what's going on.
But there's rarely interest if paid on time, so people just don't understand the damage they're doing.
Imagine using Sezzle for groceries. I doubt they are doing it out of necessity and probably out of just ease of use imo.
"I pay 5% extra on my groceries so some billionaire can hand it back to me later and tell me to be grateful for it"
Lol
Where did the extra 5% come from?
We are talking about businesses, right? They want to maximize profits, not giving money away for free... One dollar given away for free is one dollar less for the share holders. And for them, that's pretty much the worst case.
The credit card company gives you 5% money.
Now, the credit card company has a problem. It loses money.
The credit card company has an idea: Why not making the real customer (the shop) pay more? Prices for shops to use the payment method rise now.
Now, the shop has a problem. It's losing money and they think: What can we do? They rise the prices of the items they are selling. And who pays the higher prices in the end? You. And you think, you made a good deal.
The credit card company isn't losing money because it's already determined that giving people cash back won't outweigh the interest and fees etc. that they're really making money from. They use incentive programs to lure people in, hoping they won't be able to pay off their balance each month. Those who can are basically getting discounts from the cash back program.
I've wondered about this for a long time. But I'll never know for sure. Don't know if overall I'm paying more, or a little bit less, with the cashback.
All I know for certain is that, overall, the credit card companies aren't losing money.
If you think that, you're exactly the kind of fool the credit card companies prey on
Yeah I'm such a fool for paying off my card balance every month and taking advantage of cash back programs. I should be smarter and pay with cash so it costs me more.
Well if the business is raising its prices on all products because of card processers then you would be the fool paying for it without getting the 5% back.
They get their money mostly from interest rates and other means. It doesn't mean stores don't occasionally raise prices because of processing fees but that's not part of some grand conspiracy.
Or you know,live in any other country where they didn't have to do that because people aren't buttoned up the back
What? Nothing you said doesn't change the fact that what you think is happening isn't.
I truly don't even understand what this is trying to say.
There's a good reason credit cards aren't popular in other countries
They're not daft enough to fall for it 😂