Buy now, pay dearly? (update)

Summary

Planet Money: "Buy Now, Pay Dearly? (Update)"

Date: November 12, 2025
Hosts: Alexi Horowitz-Ghazi & Taylor Washington

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Episode Overview

This episode of Planet Money revisits the story of "Buy Now, Pay Later" (BNPL) services—how they swept through online shopping during the pandemic, their economic impact, and who ultimately pays the price. Through the journey of college student Amelia Schmarzo, the hosts explore how BNPL loans have shifted spending habits and discuss their broader consequences with experts from the Federal Reserve. The episode also explores updates in BNPL usage, regulation, and consumer risk as of 2025, with a special focus on Gen Z consumers.

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Key Discussion Points & Insights

1. Personal Story: Amelia’s Rabbit Hole with Buy Now, Pay Later

• The Hook:
  Amelia, bored and isolated during the early pandemic, was swept into online shopping by influencers and encountered BNPL during her first major purchase—a $200 bikini.
  • “It just felt so cheap, you know, I was like, that is so affordable. $41.99… If I sat there and I genuinely was like 4199 times 4, I probably wouldn't have bought it.” — Amelia Schmarzo [02:22]
• The small, recurring payments made expensive luxuries feel attainable and led Amelia into a shopping spiral compounded by impulse buys.
• Packages felt like “gifts” and purchases felt like they “weren’t real money.”
  • “I'm not gonna lie, it felt free. Like, it literally felt like free money. ...it just all felt like Monopoly money.” — Amelia Schmarzo [04:47]

2. BNPL Basics: How Does It Work and Why Is It Everywhere?

• BNPL provides short-term, interest-free loans at point-of-sale, often with minimal credit checks.
• What Sets BNPL Apart?
  • No interest for most customers
  • Merchants, not consumers, pay the fees—between 4% and 9.5% per transaction, often double standard credit card fees.
  • Merchants are willing to pay higher fees to reduce abandoned shopping carts and attract new, often younger, customers.
• Expert Perspective:
  • “It's credit by another name.” — Julian Alcassar, Kansas City Fed [09:39]
  • "It almost is like, too good to be true." — Terry Bradford [09:53]

3. BNPL’s Meteoric Rise and Merchant Incentives

• Critical mass during the pandemic: BNPL spread rapidly as online shopping boomed.
• Partnerships with big brands (Amazon, Target).
• BNPL now stretches beyond trendy apparel to everyday goods and services, from groceries and gas to healthcare and dentistry.
  • “There’s a Buy Now, Pay Later firm for just about anything... even healthcare.” — Julian Alcassar [15:16]
  • "That's where I was like, this is a little much." — Julian Alcassar [15:41]

4. Systemic Issues: Risks and the BNPL Business Model

• The Consumer Danger:
  Unlike traditional loans or credit cards, BNPL lenders can’t see what other BNPL loans a shopper has elsewhere, allowing easy “stacking” of debts and fostering overspending.
  • “Buy Now, Pay later firms had no idea how many Buy Now, Pay later products a consumer was using. So the opportunity to stack was fairly easy.” — Julian Alcassar [19:25]
• Parallels to the boom-and-bust behavior seen when credit cards first appeared in the '60s.

5. Competitive Response: Banks & Credit Card Companies Fight Back

• Traditional banks lost $8 billion–$10 billion in revenue to BNPL as people used their services instead of credit cards.
• Banks are fighting back by acquiring BNPL startups or launching BNPL options themselves.
• Some banks, like Capital One, limit the use of their cards for BNPL purchases.
• New challenge: current BNPL loans often aren’t reported to the credit bureaus, leaving systemic risk under the radar.

6. Who Uses BNPL Now? Demographics, Data, and Regulation

• Usage has expanded from “nice-to-have” luxury items to essentials like gas and groceries.
• Disproportionate Impact:
  Black and Hispanic women are twice as likely to use BNPL compared to other groups. Users also often have existing debt (student loans, car loans, personal loans).
• Nearly half of all BNPL users paid late last year [data from the Consumer Financial Protection Bureau]. Regulatory changes are pending: BNPL balances will soon be factored into credit scores, potentially penalizing frequent, young users.
  • “Without maybe some education about how using Buy Now Pay later can spiral on you, it could become a problem and it could become a lingering problem...” — Terry Bradford [24:38]

7. Back to Amelia: Lessons Learned & Life After BNPL

• After spiraling into $2,000 of debt, Amelia faced her dad’s tough love—he didn’t bail her out, forcing her to take responsibility.
  • “He was like, Emelia, that's very dangerous. Installment payments are extremely dangerous. Like, this affects your future.” — Amelia Schmarzo [20:49]
• Amelia relapsed but eventually quit BNPL and credit cards cold turkey. She still feels the pull of those tempting buttons, now appearing everywhere—including at cosmetic clinics offering installment plans for treatments.
  • “Literally, my lips would be on an installment payment.” — Amelia Schmarzo [23:08]
• Now working with influencers, she still enjoys “hauls,” but pays up front, not on credit.

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Notable Quotes & Memorable Moments

• “It just all felt like Monopoly money.” — Amelia Schmarzo [04:47]
• “It's credit by another name.” — Julian Alcassar [09:39]
• “I was always expecting this gotcha moment... and it wasn't coming around.” — Julian Alcassar [11:04]
• "That's the scariest thing to me now is just like, if I didn't learn my lesson, oh, my gosh, literally, my lips would be on an installment payment." — Amelia Schmarzo [23:08]
• “There is just no place, I think, where you cannot see Buy Now Pay Later.” — Terry Bradford [23:17]

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Key Timestamps

• [00:06–05:52] — Amelia’s personal BNPL spiral begins
• [06:19–08:44] — BNPL basics and why “free” loans are everywhere
• [09:58–11:22] — BNPL business model: merchants pay, not customers
• [13:23–15:41] — Demographic targeting and expansion to essentials & services
• [17:31–18:19] — Bank and credit card industry response
• [19:00–21:33] — Risks of loan “stacking” and Amelia’s financial reckoning
• [23:21–24:38] — BNPL's spread, new research, and looming regulatory changes
• [24:58–26:00] — Prudent use, lessons from Amelia, and her current influencer life

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Tone & Style

The episode features Planet Money’s signature mix of relatable narrative, economic insight, playful banter, and down-to-earth interviews. Listeners are encouraged to see how financial innovations can seem empowering or harmless, only to reveal deeper risks—especially for vulnerable consumers.

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Final Takeaways

• BNPL is rapidly expanding from luxury shopping to essentials, and its risks are surfacing as usage grows.
• Younger consumers—especially women of color—are using BNPL most and may soon see real credit consequences as reporting changes.
• BNPL can be helpful for prudent buyers needing flexibility—just don’t let the “monopoly money” feeling lead to a spiral.

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“The later in Buy Now Pay Later had finally arrived.” — Alexi Horowitz-Ghazi [22:16]

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For a guilt-free way to support journalism, the hosts cheekily suggest Planet Money+—in four easy installments.

Transcript

[Taylor Washington]

This is Planet Money from npr.

[Alexi Horowitz-Ghazi]

This is the story of how Amelia Schmarzo fell into a kind of rabbit hole. One that involved a lot of online shopping. But the story isn't about the stuff she bought as much as the new way she found to pay for that stuff. It starts a couple years ago in the spring of 2020, when Amelia found herself, like so many of us, locked down at home, but bored, scared, going a little stir crazy.

[Amelia Schmarzo]

I was like, who am I? Like, what is going on? Like, oh my gosh, did I hit a midlife crisis at the age of 20? I was like, I need to find new passions that I can, new hobbies to keep myself busy.

[Taylor Washington]

So Amelia's a junior in college. She's living in an apartment in San Diego, and she started doing these at home exercise videos that were made by influencers she saw on social media.

[Amelia Schmarzo]

Good morning, everyone, and welcome back to my channel.

[Alexi Horowitz-Ghazi]

And Today we have 3 pound, 10.

[Amelia Schmarzo]

Pound and 20 pound weights. I like, swear these are what makes your butt grow. And then I found influencers who followed these influencers. And so that is how I kind of got into the realm of getting influenced by influencers.

[Alexi Horowitz-Ghazi]

That's how you fell under the influence?

[Amelia Schmarzo]

Absolutely.

[Alexi Horowitz-Ghazi]

Emilia says the lives of these trendy jet setting zoomers just felt so glamorous.

[Taylor Washington]

And she's like, maybe if I get the right clothes and accessories, maybe my life could be more like that. I mean, we've all been there.

[Amelia Schmarzo]

They look pretty, they look confident. I want those words people to describe me as that.

[Alexi Horowitz-Ghazi]

A lot of the influencers Emelia is following are constantly showing off their new outfits.

[Amelia Schmarzo]

Back to my channel Today I have a summer clothing haul for you guys.

[Alexi Horowitz-Ghazi]

Then there'll be a link to the websites where you can buy exactly what they're wearing. And in one of these videos, Amelia sees the bikini.

[Amelia Schmarzo]

Oh, yeah. It was literally like a white and brown tie dye bikini.

[Taylor Washington]

It doesn't sound that special, but to Amelia, it felt like the first step to reinventing herself. So she clicked the link.

[Amelia Schmarzo]

The price was somewhere around $200 for the bikini.

[Alexi Horowitz-Ghazi]

And had you ever spent that kind of money on a piece of clothing before?

[Amelia Schmarzo]

No, not even close.

[Alexi Horowitz-Ghazi]

But then Amelia notices an offer in small type just below the total 4 interest free payments of $41.99 with after pay.

[Amelia Schmarzo]

It just felt so cheap, you know, I was like, that is so affordable. $41.99. And if I sat there and I genuinely was like 4199 times 4, I probably wouldn't have bought it. Yeah, but I was like, oh, I'm easily going to get $41 next month. Like, that's nothing to worry about.

[Alexi Horowitz-Ghazi]

So suddenly, the most expensive garment you've kind of considered buying feels like it's actually a bit of a bargain.

[Amelia Schmarzo]

It really does.

[Alexi Horowitz-Ghazi]

You're like, I just lucked into a kind of a steal.

[Amelia Schmarzo]

I'm like, wow, I'm paying $41 for a $200 bikini. Like, I am a genius.

[Alexi Horowitz-Ghazi]

This was Amelia's first experience with a kind of payment called buy now, pay later. After an extremely cursory credit check, the kind that won't affect her credit score, she's approved, clicks the purchase button. The company, afterpay, charges her card for the first installment.

[Taylor Washington]

They accept credit or debit.

[Alexi Horowitz-Ghazi]

She chooses credit, and the bikini is on its way.

[Announcer]

The.

[Alexi Horowitz-Ghazi]

The process was that simple. And so a few days later, when she sees another influencer showing off something else she liked.

[Amelia Schmarzo]

So I guess we'll start off with my most favorite pair of sneaker that I own.

[Taylor Washington]

Emelia clicks the link, and again, she sees that buy now, pay later option.

[Amelia Schmarzo]

It literally made the price, like, I kid you not, like, $8. So in that mindset, I was like, oh, my gosh, I can afford the world. And so I. That's why I threw in that swimsuit, and I threw in the jacket and the jeans and hit me. Yeah, right? I'm like, put them all in the cart.

[Alexi Horowitz-Ghazi]

Yeah.

[Amelia Schmarzo]

And my total was literally, like, $20.

[Alexi Horowitz-Ghazi]

So how. How does this pick up? Like, is it over the next, like, couple weeks? Is it months?

[Amelia Schmarzo]

I would say days, to be honest.

[Alexi Horowitz-Ghazi]

Before she knows it, Emelia has fallen into a kind of shopping spiral.

[Amelia Schmarzo]

I got, like, a whole bunch of, like, really nice jeans from Aritzia.

[Alexi Horowitz-Ghazi]

She got fancy sweatpants, sweatshirts.

[Amelia Schmarzo]

Sweatshirts, because sweatsets were super in. Right, because you weren't leaving the house.

[Alexi Horowitz-Ghazi]

So I got a bunch of new.

[Amelia Schmarzo]

Shoes, brand new high heels, Jordans, Yeezys. Buying stuff online was the only thing that really gave me that, like, adrenaline, you know what I mean? When it came in the mail, because there was nothing else going on, it was so exciting. It felt like Christmas.

[Alexi Horowitz-Ghazi]

Emelia says all of the packages arriving on our doorstep felt kind of like gifts. Like some mysterious stranger was footing the bill for everything on her list just out of the goodness of their corporate heart.

[Amelia Schmarzo]

I'm not gonna lie, it felt free. Like, it literally felt like free money. Because I didn't see it. It wasn't cash. I don't know. It just felt like it was never Gonna catch up. It just all felt like Monopoly money.

[Alexi Horowitz-Ghazi]

So you're like watching Tiger King mashing that Buy now pay later button.

[Amelia Schmarzo]

Life was good.

[Alexi Horowitz-Ghazi]

What was the first sign that trouble might be brewing?

[Amelia Schmarzo]

I didn't think about it, literally, until I got an email from Discovery saying, your statement is ready to be viewed.

[Taylor Washington]

One thing to know about Amelia, before she started using Buy Now Pay later, she was pretty allergic to using her credit card at all. It was one her dad helped set up for essentials and emergencies. And her statement had only ever been a few hundred dollars at the very most.

[Amelia Schmarzo]

But this time I saw that it was $2,000, which was my limit. And then I saw my debit card went from $700 to like $20. And that's when I was like, I am going to throw up. Like, how did this happen?

[Alexi Horowitz-Ghazi]

Hello and welcome to Planet Money. I'm Alexi Horowitz Ghazi.

[Taylor Washington]

And I'm Taylor Washington.

[Alexi Horowitz-Ghazi]

At its most basic, a loan is a way to get money now in return for a little bit extra or a lot when you pay it back down the road. That's been true as far back as, I don't know, ancient Babylon. But all of a sudden, over the past couple years, there's been an explosion of new companies offering what is essentially free money, a no interest loan.

[Taylor Washington]

Today on the show, what exactly is Buy Now Pay Later? How it works and why it seems to be everywhere. And should we be worried?

[Alexi Horowitz-Ghazi]

We originally reported the story of amelia back in 2022. Since then, buy Now Pay later has continued to spread across the economy. And people are using it for all sorts of basic necessities as living costs shoot up. All right. As credit scores are falling, especially among Gen Z. So today we're going to revisit our original episode on how companies like Klarna and afterpay and Affirm make money. And. And we'll get an update on Amelia in 2025. We'll find out exactly who is using Buy Now Pay later now and if it's ever a good deal for you, for Amelia, for the economy.

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[Alexi Horowitz-Ghazi]

Okay, so Taylor Washington, you are a producer here on the show.

[Taylor Washington]

Yep.

[Alexi Horowitz-Ghazi]

And you first brought up by Now Pay later in one of our editorial meetings a while back.

[Terry Bradford]

Yes.

[Taylor Washington]

So I heard about it a while ago because all of a sudden I saw a ton of people my age, you know, fellow Zoomers, where, and they were going on these crazy shopping sprees all over TikTok. A lot of people jumping in head first, just like Emelia. And so it seems like something we should look into.

[Alexi Horowitz-Ghazi]

Right. Okay. And we will get back to Amelia's story in a bit. But Taylor, what I remember from when you first pitched this was that a lot of us kind of knew what you were talking about. Like, we'd seen these Buy now, pay later options online, but nobody really understood, like, how it actually works.

[Taylor Washington]

Yeah. So people started talking about payday loans or rent to own or layaway. Because with layaway you also pay in installments, but you don't get the thing until it's paid off.

[Terry Bradford]

Yeah, that's what Buy now, pay later feels like. Good old fashioned layaway.

[Alexi Horowitz-Ghazi]

This is Terry Bradford. She's a payments expert at the Kansas City Fed. And a couple years ago, she and.

[Julian Alcassar]

Her colleague Julian, Julian Alcassar, I also work at the Federal Reserve bank of Kansas City.

[Alexi Horowitz-Ghazi]

They teamed up to start looking into Buy Now, Pay Later. How would you kind of describe your dynamic as a duo? Are you more like a Batman and Robin style thing? Are you like Sherlock Holmes and Dr. Watson?

[Terry Bradford]

Like, you know what? I would say we're Woodward and Burn. How about that?

[Alexi Horowitz-Ghazi]

Ooh, yeah. Those are terms that we can understand. Okay. So when our financial Woodward and Bernstein started looking into Buy Now, Pay Later a couple years ago, the business model was still a bit of a mystery to them. But one thing was clear.

[Julian Alcassar]

It's credit by another name.

[Terry Bradford]

That's what it is. Yeah. So it's not unlike, I guess, buying a car or buying a house. The difference is you aren't paying interest, you know?

[Alexi Horowitz-Ghazi]

Yeah, yeah.

[Terry Bradford]

It almost is like, too good to be true.

[Alexi Horowitz-Ghazi]

Too good to be true. Because here's what most Buy Now, Pay later companies are offering. They're saying as long as you are able to clear a pretty low bar, like a soft credit check that won't show up on your credit score, they will spot you the money for whatever you're buying, you agree to pay them back in four installments.

[Taylor Washington]

They collect the money from whatever bank account or debit or credit card you want. And those payments are all interest free.

[Alexi Horowitz-Ghazi]

Which raises a pretty big question. If most customers are not paying any.

[Terry Bradford]

Interest, how are you making money on this? Interest free loans, where's the value proposition in that?

[Alexi Horowitz-Ghazi]

Yeah.

[Terry Bradford]

So where was the money coming from? Right, right.

[Taylor Washington]

Where was the money coming from? Lending money is usually a big moneymaker because of some combination of interest and fees.

[Alexi Horowitz-Ghazi]

But when Terry and Julian peaked under the hood of the business model, not only are the companies not charging interest, the fees generally aren't super high either. So for customers, as long as they don't buy more than they can afford, which is obviously a big if, these loans can be a great deal, basically the cheapest money you can get.

[Julian Alcassar]

I was always expecting this gotcha moment.

[Alexi Horowitz-Ghazi]

Yeah.

[Julian Alcassar]

And it wasn't coming around. So I was very like, where's the surprise? I was, you know when you watch a scary movie and you could hear the suspenseful music and then there's Michael Myers behind the door. That's what I was expecting.

[Alexi Horowitz-Ghazi]

The gotcha moment was not what they expected. Instead of making money by gouging their customers with hidden fees, it turned out Buy now, pay later companies were taking their cut from the other side of the transaction, from the businesses actually selling the goods.

[Julian Alcassar]

So it goes between 4 and as high as 9.5% is what merchants are paying. Buy now, pay later firms.

[Taylor Washington]

Credit card companies usually charge merchants anywhere from 2 to 4%. So buy now, pay later companies are often asking for a way bigger cut.

[Alexi Horowitz-Ghazi]

So I just want to break this down. Clearly they're saying, we're going to charge you around double of what credit cards charge per item that you sell using our payment service.

[Terry Bradford]

Yeah. It doesn't quite seem to jive, does it?

[Alexi Horowitz-Ghazi]

What makes it jive is that credit card charges are widely variable, depending on whether it's a MasterCard or an Amex or a Visa, and whether there are rewards, it makes things harder to predict. Also, credit cards come with these pesky consumer protections that put businesses on the hook if customers complain.

[Terry Bradford]

So if something goes wrong in the product that they bought, broke, or didn't perform to their satisfaction, they have the right to request a charge back. And so the merchant could have that whole amount that they'd received withdrawn by the credit card company because the customer said the product was no good for them.

[Alexi Horowitz-Ghazi]

Right. So if you've ever asked your credit card company for A refund because the thing you bought turned out to be junk. That's what she's talking about. That can be a big pain for businesses.

[Taylor Washington]

But the biggest reason that businesses are signing up for Buy Now, Pay later is that it's helping them sell more stuff, for example, by bringing in a new pool of customers.

[Alexi Horowitz-Ghazi]

Because what Terry and Julian saw as they dug through pitch decks and advertisements and influencer videos was that at first, Buy Now, Pay later companies were targeting a pretty specific demographic. They wanted to offer small loans at the point of sale to reach people who don't usually buy on credit, which.

[Taylor Washington]

Is actually a lot of people. For example, people who don't have much of a credit history, people who have bad credit, or people like Amelia who grew up during and after the financial crisis and are more reluctant to use credit cards at all.

[Alexi Horowitz-Ghazi]

All of those people might not have bought anything without Buy Now Pay Later. So not only are businesses getting new customers, but many of those customers are young. As they get older, they'll likely earn more money, and they might come back and spend it on top of that.

[Taylor Washington]

Julian says Buy Now, Pay later helps retailers with the problem they call cart.

[Alexi Horowitz-Ghazi]

Abandonment, which will be familiar to almost anyone who's shopped online.

[Julian Alcassar]

Most consumers will put items in their virtual shopping cart, and then when it comes time to check out, they'll be like, I don't need to spend $200. And so what Buy Now, Pay later does. It actually reduces cart abandonment because it makes large purchases seem smaller to the consumer.

[Taylor Washington]

Remember Amelia and her monopoly money? The lower price tag can lead people to buy more than they would have otherwise.

[Alexi Horowitz-Ghazi]

Now, Buy Now Pay later has been growing in the US since at least 2015. But it reached critical mass at the perfect moment. Just as the pandemic set in, all of a sudden, online retail exploded. And Terry says so did the number of Buy Now, Pay later services.

[Terry Bradford]

It was Afterpay and Affirm and Klarna and Zezzle and Zip. Like, how many of these things are there?

[Alexi Horowitz-Ghazi]

Yeah.

[Terry Bradford]

And you were also hearing about the partnerships that they were beginning to form with large merchants like Amazon, for example, and Target. And it was kind of like, okay, wait a minute, what is happening? And they're popping up absolutely everywhere.

[Taylor Washington]

Buy Now Pay later was no longer this niche thing, mostly targeting young people allergic to credit by partnering with trendy brands. It was the new form of payment for all kinds of purchases.

[Julian Alcassar]

One thing that I found is that there's a Buy Now, Pay later firm for just about anything from small business to medium sized business. Financing to auto repair, to helping you remodel your home in four easy payments to even healthcare. Yeah, this might be tmi. I had to get my wisdom teeth taken out and my dentist can take my wisdom teeth out using Buy Not Pay Later. And that was wild. That's where I was like, this is a little much.

[Alexi Horowitz-Ghazi]

And talk about deep throat.

[Terry Bradford]

There you go. We've looped back around.

[Alexi Horowitz-Ghazi]

So when our investigators take a step back, here is what they see. Buy Now Pay later is finding its way into more and more corners of the economy, and it can be a pretty good deal for customers and it looks pretty good for businesses. But you know who is not totally thrilled? Besides Amelia, of course.

[Taylor Washington]

Credit card companies and some of the big banks behind them.

[Alexi Horowitz-Ghazi]

What they've been doing to fight back. After the break.

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[Alexi Horowitz-Ghazi]

Loans are basically the oldest financial technology in the book, but since the 1960s, when you think about how people pay with credit for everyday things, you usually think about credit cards. So you can imagine how threatening this explosion of Buy Now Pay later was to stodgy old banks and credit card companies.

[Julian Alcassar]

There was one report that showed that banks lost between 8 and $10 billion in revenue to Buy Now Pay later offerings.

[Alexi Horowitz-Ghazi]

Wow.

[Taylor Washington]

Because as Buy Now Pay later grew more popular, a lot of people started using it instead of credit cards, which means a lot less transaction fees and interest payments for the credit card companies and the banks behind them. And those banks, they obviously weren't going to stand for it.

[Terry Bradford]

Financial institutions don't generally just sit back and let things happen to them.

[Alexi Horowitz-Ghazi]

And so the banks and credit card companies are trying to fend off this hoard of new competitors. At least one bank, Capital One, is refusing to let their credit cards be used for most Buy Now, Pay later purchases. But for the most part, banks and credit card companies are getting in on the action. They're acquiring Buy Now, Pay later companies outright or rolling out their own services that look a lot like Buy Now, Pay Later. And this is why it is now possible to buy your plane ticket, to go get your wisdom teeth removed while wearing your new Yeezys and pay for it all later. And the way the system is currently set up, a lot of that spending does not get reported to the credit bureaus.

[Taylor Washington]

Which brings us to the part of Buy Now, Pay later that got Amelia into trouble. Every time she chose to pay later, she was taking out a little loan for the sneakers or the sundress or whatever. But the company giving her that little loan had no idea how many other little loans she had already taken out from other Buy Now, Pay later companies.

[Alexi Horowitz-Ghazi]

And this is where people like Terry and Julian see the greatest potential danger.

[Julian Alcassar]

One of the things that really set off the alarms was the opportunity for overextension from the consumer. Because when compared to a traditional credit card or even personal loan, they will check if you have good or no credit or if you have outstanding loans. Buy Now, Pay later firms had no idea how many Buy Now, Pay later products a consumer was using. So the opportunity to stack was fairly easy.

[Alexi Horowitz-Ghazi]

The same thing happened with credit cards when they first came on the scene in the 1960s. This new kind of credit became available to more and more people, and it was so different from what was possible before, so unregulated that a lot of people got in over their heads, spent more than they could afford.

[Taylor Washington]

People like Amelia know when you're just.

[Amelia Schmarzo]

In a state of panic. Like, you just. Just have so many things on your mind. I was pacing, I was sweating. I was crying. So I was like, that's it. I have to call my dad.

[Alexi Horowitz-Ghazi]

She'd maxed out her credit card and almost emptied her checking account. After around a month of Buying now and paying later, she did manage to get her dad on the phone. Did he play the dad card? Was he like, I'm not mad. I'm just disappointed?

[Amelia Schmarzo]

Oh, no, no, he was mad. He was like, I am mad. This is.

[Taylor Washington]

She got a whole lecture.

[Amelia Schmarzo]

He was like, emelia, that's very dangerous. Installment payments are extremely dangerous. Like, this affects your future. He's like, you're not paying $10. You're paying $40.

[Taylor Washington]

He did not bail her out. Amelia had to pay off all that spending by herself.

[Alexi Horowitz-Ghazi]

And how did the conversation end? Like what did you agree on?

[Amelia Schmarzo]

Just to stop using it. Pay off what I had to pay off and don't continue using it. Like, if you really want something that's expensive, you're going to have to take that money out of your savings and pay for it right then and there. I have to wait for your next paycheck. Like, I think I was like, what, 20 at the time? And 19 or 20. And he was like, you don't. You shouldn't be able to afford all this right now, and you clearly can't. So pay off what you have to do and don't put anything else on it.

[Alexi Horowitz-Ghazi]

And how long did it take before you Bought now and Paid later again?

[Amelia Schmarzo]

Uh, like, two weeks. I didn't learn.

[Alexi Horowitz-Ghazi]

That was 2022. And for a while after, Amelia says she kept using Buy Now Pay Later a lot.

[Amelia Schmarzo]

It got to the point where I just kept Getting texts like, 22.99 is being pulled out from this debit.

[Alexi Horowitz-Ghazi]

$22.99 here, $22.99 there. Adding all the way up to $900.

[Amelia Schmarzo]

These charges were piling up. I was using different platforms. I was using Klarna afterpay and probably Affirm, like, all at once. It feels like you're just being buried alive.

[Alexi Horowitz-Ghazi]

After another year and a half of buying, Emelia woke up one morning and realized she had more texts from these companies than from her friends. The later in Buy Now Pay later had finally arrived.

[Amelia Schmarzo]

That's when I was like, okay, if I can't manage it, then, like, I need to just, like, cut this out. Because, like, I can't have nice things. Clearly, Like, I'm not capable.

[Alexi Horowitz-Ghazi]

So two years ago, Amelia decided to go cold turkey. No more Buy Now Pay Later. She says she hasn't used it since, and she's paid off all of her Buy Now Pay later debt. But every time she's buying online, she sees those colorful buttons tempting her, and they're in more places every day. Like this one time when she was getting her lips done, the tech asked if she wanted to use something called Cherry to pay. That's a lender that finances lip fillers and plastic surgeries for up to 50,000 doll. Emelia said, no, thanks.

[Amelia Schmarzo]

That's the scariest thing to me now is just like, if I didn't learn my lesson, oh, my gosh, literally, my lips would be on an installment payment.

[Terry Bradford]

There's just no place, I think, where you cannot see Buy Now Pay Later.

[Alexi Horowitz-Ghazi]

Right now, that's Terry Bradford with the Kansas City Fed. Again, the Woodward of our financial Woodward and Bernstein from earlier. She's kept up with these kinds of services over the past few years, and she says that is the big change. A few years ago, tons of Buy Now Pay later companies were trying to be everywhere. Now they are everywhere. Today, people use Buy Now Pay later for all kinds of things and not just luxuries.

[Terry Bradford]

When we first had this conversation, it was more about the nice to haves. And now you're seeing Buy Now Pay later for things that you need. Gasoline, groceries.

[Alexi Horowitz-Ghazi]

Terry says we also know more about who exactly is using these services. The Fed's research has found that black and Hispanic women are about twice as likely to use Buy Now Pay later than any other demographic group. And the Consumer Financial Protection Bureau found that Buy Now Pay later users also tend to have balances on things like student loans and car loans and personal loans. Also, almost half of Buy Now Pay later borrowers paid late last year, which could spell trouble because there are plans to factor Buy Now Pay later into your credit score starting sometime this fall, which could land heavily on Gen Z consumers. Because the people most likely to use Buy Now Pay later are younger and Gen Z credit scores have been falling over the past year.

[Terry Bradford]

The demographic that's heavily using Buy Now Pay later is a younger demographic. And without maybe some education about how using Buy Now Pay later can spiral on you, it could become a problem and it could become a lingering problem now.

[Alexi Horowitz-Ghazi]

Terry says Buy Now Pay later can still be a good deal if you are a prudent shopper, for example, and you need to buy groceries, but you don't have access to credit or cash because there's no interest on these loans. They're generally, generally better than something like a payday loan, but not if you are going on a shopping spree. Which brings us one last time to our Gen Z shopper, Emelia. After cutting out Buy Now Pay Later, Emelia also cut out credit cards. But she couldn't quite give up the influencer life. In fact, she now works for a company that helps influencers partner with brands. And she dabbles in some influencing herself.

[Amelia Schmarzo]

Okay guys, I'm getting ready to go.

[Alexi Horowitz-Ghazi]

To a pool party, which helps scratch that bikini buying itch.

[Amelia Schmarzo]

So I'm gonna give you guys a mini haul and have you guys pick which one we like the best.

[Alexi Horowitz-Ghazi]

This time without all the debt.

[Amelia Schmarzo]

Bandeau style top, which I really like and it has little ruffles on it which is so cute.

[Alexi Horowitz-Ghazi]

If you're looking for a guilt free way to spend money, may we recommend Planet money. Plus, each monthly subscription means a steady source of funding we count on and we can use to plan our reporting. It's really helps and we'd love for more of our funding to come directly from all of you. Thanks as always to existing supporters who get bonus episodes and sponsor free listening. Sign up at plus.NPR.org planetmoney or click the link in the show notes. This episode was originally produced by Emma Peaslee, engineered by Josh Newell and edited by Molly Messick. Our update was reported by Vito Emanuel, produced by Willa Rubin and edited by our executive producer and Alex Goldmark. Special thanks to Taylor Washington. She is no longer a producer with us. She's currently in nursing school about to graduate. So if there are any hospitals out there looking for a smart, caring, trend spotting healthcare professional, you know where to look. I'm Alexi horowitzkhazi and as she said.

[Taylor Washington]

Three years ago, I'm Taylor Washington. This is npr. Thanks for listening.