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May 13, 2024 3 mins
NBC's Erin Real reports that this can be a good decision if you can afford to do it
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(00:00):
On the Legacy Retirement Group dot comphone line from NBC News Radio. Le's

(00:04):
welcome in Aaron real eron I'll helpe. You had a good Mother's Day yesterday?
Oh I did? Thank you somuch? Did you? Did you
get breakfast in bed? I didnot, but I did get plenty of
flowers and chocolates, so it madeup for it. Nothing wrong with that.
Yeah, the family did it right. I love them and we had

(00:25):
we actually had the that's a wonderfulday. It was great. Now did
they put the flowers and chocolates ona payment plan and buy now, pay
later kind of a situation? Becausethat's the that's the topic this morning is
is we've all seen those offers whereyou know, four easy payments of seventy
nine ninety nine and this can beyours where you make an initial payment and

(00:45):
then you take the product home withyou, but then you're on the hook
for like three or four more paymentsevery week or every other week. Is
this a good idea to do?It's a great question. I would say,
proceed with caution. Now here's thething. For a long time,
these came up big and strong duringthe pandemic. People loved them. They
were using them like crazy, andthey were operating in this really opaque space

(01:07):
in the sense that they didn't reportthe credit history of these to any of
the major reporting agencies, the creditbureaus that Equifax experience, TransUnion, those
days are over. Earlier this year, Apple became the first major buy now,
pay later provider to start reporting.We now have after pay, a
firm Klarna, all of these payin four. They have started to report

(01:27):
loans to the credit bureaus, andexperts say more are likely to follow.
So this is really going to factorinto credit history and ultimately your credit score.
Now, is this a good ora bad thing. If you are
young and you're trying to establish credit, make yourself credit visible and you are
certain you can make those four payments, this is nice. You don't need

(01:51):
a cell phone plan, or anelectric bill, or a streaming service,
any of those things. You cando it this way, and if you
can pay it off, your creditis going to go up. And generally
speaking, the higher your credit score, the better off you are when it
comes to getting a loan. Butif you miss the payment, and by
the way, these buy now paylaters, you younger, younger people are
on the lower end of the incomespectrum. This is just by design,

(02:13):
they've had less time to earn money. If you miss one, you're going
to be dinged and your credit's goingto be seriously hurt by it. Now,
previously they were not required to reportto credit agencies correct exactly. This
is a new thing, Yeah,which is crazy. I mean, it's
debt and this just was not factoringinto it. So for a while people

(02:34):
got to get away with it.Not anymore. So that was the term
phantom debt we saw being thrown aroundthat people had these these short term kind
of no interest loans essentially, butthey won't being reported. So it was
there's debt that Wall Street didn't reallyknow about, and economists didn't really factor
into what was going on. Andnow that's going to and I just saw

(02:55):
a stat that the buy now,pay later market is going to be it's
seven hundred billion dollars by twenty twentyeight. That's insane, insane, And
like you said, that stantom debt, you absolutely know what you're talking about
here because it basically makes all thosewho are projecting our debt burden, our
outstanding personal loan debt way lower thanthey think we know from January through April

(03:19):
of this year by now pay Latersdrove thirty billion in online spending. That's
twelve percent year over year, andit wasn't really reported. It hasn't been
baked into the numbers yet, soour outstanding debt is probably way higher than
the trillions of dollars that we currentlyhave reported
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