Credit in general is an incredibly regressive tax; only the poorest end up paying much interest and it's a much larger fraction of their total cash flow. I can get between 2% and 4% cash back on all purchases on a credit card that I pay off monthly with a zero-fee ACH transfer, paying no interest or yearly fees. I literally take poorer or less financially secure people's money that they spend on credit card interest. While the prices I pay likely reflect an overhead of 1.5%-3.5% to cover merchant credit processing fees I potentially come out net positive.
Finally, if I had substantial investments, I would be earning returns for the ~month before having to liquidate assets to pay the credit card.
The bank financing my car loan is still paying me to have it because inflation is still so high and I got lucky with origination date.
In general I am skeptical of the overall societal benefit of new financial instruments for the above reasons. E.g. I can't imagine BNPL loans existing in a strong economy of mostly secure and economically savvy middle-class earners.
Yes, regular credit cards work that way, but this is different.
In the “buy now, pay later” scheme, the person getting the loan doesn’t pay the interest, or at least no more than any other customer. They’re getting subsidized by other customers.
Finally, if I had substantial investments, I would be earning returns for the ~month before having to liquidate assets to pay the credit card.
The bank financing my car loan is still paying me to have it because inflation is still so high and I got lucky with origination date.
In general I am skeptical of the overall societal benefit of new financial instruments for the above reasons. E.g. I can't imagine BNPL loans existing in a strong economy of mostly secure and economically savvy middle-class earners.