Buy Now. Pay Never.

by Annan Nippita ’29

Buy Now Pay Later systems have existed in one form or another since people started trading goods and services hundreds of thousands of years ago. It wasn’t formal or too contractual. You paid your neighbors back for the carrots you borrowed for your stew, but it wasn’t a big deal.

Ever since then, the concept has evolved into something more formal, more contractual, and with much more money exchanging hands. What used to be the odd cabbage went on to be any article of clothing, electronic gadget, piece of furniture, or anything else that one could buy online. Basically, anything that you could realistically want in a moment’s notice without thinking too much about.

And this is where the problem arises, especially for the average American. In 2025, the median income in the United States is about $45,000, with the median bank account balance in the United States being $8,000. The amount of people living paycheck to paycheck in the United States is between 50% and 70%.

A quick glance at the math could tell anyone with common sense to not spend money on a new pair of pants, shoes, or a new mattress, if there wasn’t actually a way for them to repay these companies. But it’s the opposite.

Since the pandemic, the amount of people that have or are regularly using these services has gone from 37% to over 50%, based on various different studies ranging from ones done by third-party organizations to the companies themselves.

The total value of purchases done through Buy Now Pay Later companies in the US alone has skyrocketed from just $2 billion in 2019 to $120 billion in 2023.

The average user of these services owes $883 to these companies, according to C + R Research. This study also found that these same people are paying back money for an average of 3.8 items, with the median monthly payments being around $100 to $250.

Taking into account that most people using these systems are under 35, and their average monthly income is somewhere between $3,000 and $4,500, the percentage of monthly income going to these companies is somewhere between 2% and 9%, using the statistics for median monthly payments.

50% of the income of a person aged 25 to 35 goes to housing; 30% to transportation; 12% to insurance; 11% to food; and 25% going to taxes. There isn’t actually enough money that can be allocated for this discretionary spending.

This comes from several different research rabbit holes, so counting up these categories it does not equal 100% but rather 128% of one’s monthly income.

Just seeing these individual estimates of monthly expenditure, it is a miracle that the average American even has money left in their bank account at the end of the month. It’s a miracle that this number is positive. But that’s where the miracles end. At least from the point of view of an accountant.

For the average American, $1200 for a laptop would be an expenditure to save up for. But with Best Buy’s own credit card, you can buy their computer for only $49.96 a month for the next two years. Technically, you’d be spending 4 cents more than you would have otherwise by just buying the laptop on day one, but in the long run, those four cents don’t matter too much. What does is the monthly payment.

$1200 up front may seem daunting, but the $50 bucks each month seems like you just found a deal. You could walk away with this computer for $50 on day one, and then worry about the rest when it came time. And this is really why Americans go into debt for consumer goods. Studies have shown that it seems like a deal if you don’t have to pay for it all on day one. Your brain registers the future payment as less than the price tag.

But it really isn’t. While the interest for a loan from a bank may be 5% or up to 15%, the interest rates on credit cards, like the one that Best Buy offers to finance their laptop, have the interest rates of a credit card: anything from 20% to well over 35%.

At best, you’re spending 4 cents more. At worst, you could go into debt because of your new laptop. And new is relative. You could be fine for a year, but if you for some reason lose your job a year and a half in, it could be the old laptop you’re going into debt to finance.

If you really think about it, it kind of makes sense: how could these companies turn a profit if they are lending out so much money? Interest. They don’t make money if the customer pays them back. They only make money if the customer forgets to or just can’t and has to pay fees. A normal loan, given out by a bank, has a 5% to 12% interest rate, which is how they make money. Buy Now Pay Later companies, on the other hand, are famous for not charging interest up front.

They don’t fork out $20 and expect $21.50 in return, but they do charge you if you can’t pay them back. These companies may advertise that there aren’t any fees, but then again you could argue the same for your average credit card. Technically, you never have to pay a credit card company for anything other than that which you have charged to your card. But then again, how does J. P. Morgan Chase have the money to build a new 3.5 billion dollar headquarters five blocks from Grand Central? Interest. Late fees. Loans.

They don’t have the money without people who don’t pay back their bills. At some point or another, that’s exactly what’s going to or has already been keeping these Buy Now Pay Later systems alive. Not the people who have the money to pay them back, but the people who don’t. These systems are seen as a way of affording a new lifestyle without worrying about the cost for a month, a year, maybe even two.

The big three Buy Now Pay Later companies, Klarna, Affirm and Afterpay, brought in a total of 6.16 billion dollars in revenue last year. This is where it gets ridiculous: for companies that allegedly pay your bills without interest, they make an astonishing amount of money.

You’re not going to make money if you give your friend twenty bucks for lunch. You aren’t betting on making money on the fact that they can’t pay you back in your intended timeline. You might start ramping up the pressure if they don’t pay up, but deep down you never expected to make money off of this. You were just doing it to be nice.

No person lending their carrot to their neighbor a hundred thousand years ago expected to get two in return. They were just trying to help out a friend.

These companies, on the other hand, have built a business model— lending out cash and extorting those who can’t pay back— on the fact that Americans want stuff and don’t have the money to get it. They have made a business model based on the assumption that enough of their customers won’t pay their bills.

These companies are capitalizing on the misfortunes of all of us. They say they are “Buy Now Pay Later” companies, but they don’t actually want you to pay later. If you don’t pay, they gain. In some messed up way, they actively want you to not be able to pay those $50 dollars for the computer each month. They want you to wait. They want you to rack up debt. Because that’s how they make money. Not by you paying your bills, but by you not paying your bills.