When it comes to big-ticket items like homes and cars, we’re used to living debt large through mortgages and auto financing. Most folks have learned, sometimes the hard way, about the dangers of consumer splurges financed by credit cards. But the emerging phenomenon of debt-propelled small-scale consumption raises new ethical and practical challenges.
These days even the tiniest online shopping order can be interrupted by a digital microfinance hand wave offering shoppers the option of getting their purchase immediately while staggering payments through a short-term loan, usually 12 to 36 months.
These programs resurrect the old department store layaway plan but in reverse: We give you the product up front and you pay us later. Seems like a win-win all around. Consumers get the goods and corporations get their dough while middlemen microlenders like Affirm, AfterPay, and Klarna take a small cut. These loan platforms are innovating what has come to be called the BNPL economy—“buy now, pay later.”
A major positive of these point-of-sale loans is that they create lower-interest alternatives to piling debt onto your perhaps straining credit card. In fact if your credit is good, you can expect zero interest options to make that slightly-out-of-reach, should-I-or-shouldn’t-I purchase seem irresistibly reasonable. The terms of the transactions are typically carefully detailed—a big plus for transparency. Affirm’s founders in fact tout the new platform as a rebel strike against the gouging, dominant, and opaque repayment policies of America’s big bank credit cards.
So what’s the harm? There are some practical family budgeting concerns of course. Consumer Reports found that when consumers made too many of these mini-loan deals, they often lost track of them. A study of one service found that as much as 43 percent of the consumers who used the BNPL option ended up falling into arrears.
No big deal? Not if the terms of the little loan mean late payment fees or surrendering your zero percent interest. Beyond those practical concerns, the “get now, figure out how to pay later” model seems like another step into the obliviousness that buttresses the worst aspects of U.S. consumer culture.
In the interest of full disclosure, I must acknowledge that I have personally used these programs and that several big-ticket items in my household at this moment (too embarrassing to disclose but rhymes with Beloton) have been so financed. Is it hypocritical now to raise a few objections? Maybe. Then again perhaps enough good-old American Puritanism has rubbed off on me to find deeply suspect financing that seems too easy for my own good. Whatever happened to prudence and thrift, saving up before you buy something so that object of your consumerist desire really feels earned? And the quick-loan model’s breezier financing for thee but just another barrier for thou—people, that is, without sparkly credit—creates a new driver of inequity in U.S. life.
Overconsumption is not just a threat to our souls.
It also creates many more get-thee-behind-me-Satan moments for family breadwinners. Online shopping is a nonstop custody-of-the-eyes—and wallet—obstacle course, a threat to remaining reasonably free of the gnawing money anxiety that can diminish family life. We’ve also learned that leaning in to “throwaway culture” creates other harms. Overconsumption is not just a threat to our souls; it has proved a demonstrable injury to creation in an era when many of the speculated worst effects of climate change are becoming all too real.
Instead of creating more opportunities for impulse buying, what most of us could use is a chance to pause, take a breath, and consider whether that next purchase is something that would really add value to our lives, preferably without depriving someone else in the production end of the world. Can someone out there build me do-not-lead-me-into-temptation.com?
This article also appears in the October 2021 issue of U.S. Catholic (Vol. 86, No. 10, page 42). Click here to subscribe to the magazine.
Image: Unsplash/Claudio Schwarz