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

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

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.

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.

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]

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

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.

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.

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

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