\n<\/p>\n
On the subway a few weeks back<\/span>, I noticed an ad for a \u201cbuy now, pay later\u201d service from Cash App. It read: \u201cLittle payments are so much cuter.\u201d This ad wasn\u2019t made for men, I thought.<\/p>\n \u201cBuy now, pay later\u201d is promoted as interest-free borrowing, which many people, frightened by the idea of going into debt, see as safer. But miss a payment, and the late fees kick in\u2014$8 here, $6 there. Miss payments on a few different orders, and the fees add up fast. You could be paying much more in the end than you would if you were paying interest on a credit card. Worse, your account could be sent to a collection agency, destroying your credit score.<\/p>\n On average, men have more total debt than women, but women are 68 percent more likely to use installment payment services such as Afterpay, Klarna, Affirm, and Quadpay, a 2024 study by the Federal Reserve Bank of Boston found.\u00a0 This might be less about how women spend money than it is about where they spend it. Although buy-now-pay-later services are accepted on purchases as varied as airfare and electronics, clothing accounts for more than half of the services\u2019 gross merchandise value. And women are the bulk of those customers.<\/p>\n This is easily gleaned from the services\u2019 advertising campaigns. Klarna, for example, paired up with Paris Hilton to create the \u201cHouse of Y2K,\u201d an interactive pop-up devoted to Millennial nostalgia selling a limited-edition \u201cParis Hilton x Klarna\u201d velour tracksuit; Klarna also partnered with the fast-fashion brand Shein on pop-up stores, including a bubble-gum-pink party bus\/traveling store emblazoned with the phrase In Pink We Trust<\/span>. Murals in Los Angeles and New York featured illustrations of cute strawberries and ice-cream cones and the tagline Afterpay is like eating the whole carton and spreading the calories out over 6 weeks<\/span>.<\/p>\n The business model of \u201cbuy now, pay later\u201d companies is not really about selling their services to women directly. It\u2019s about selling themselves to the retailers that want to sell things to women. Lots of online shoppers load up their carts but, once they see the total cost, don\u2019t follow through. Companies such as Afterpay pitch themselves to merchants by promising to solve this issue of \u201ccart conversion\u201d\u2014shoppers are more likely to click \u201cPay now\u201d if they have the option to pay less upfront. Jessa Loomis, an associate professor at Newcastle University, in England, is an expert on these companies; she describes herself as a \u201cfeminist economic geographer\u201d whose research focuses on the \u201ceveryday effects\u201d of global finance. The companies make their real money not from the fees they charge consumers, she told me, but from what they charge \u201cthe retailer or merchants to be able to have \u2018buy now, pay later\u2019 embedded in their payment ecosystem.\u201d They are essentially telling brands, \u201cWe can get women to spend money here.\u201d<\/p>\n And it\u2019s working. \u201cBuy now, pay later\u201d has become the gateway drug to consumer debt for more and more women.<\/p>\n I first used Afterpay in 2018<\/span>, when I was 20. I had a sorority formal coming up, and the other girls at my SEC school would be wearing their wealth loudly. I couldn\u2019t be the one in the same sequined bodycon number that I wore to last year\u2019s spring fling. I filled my online cart with five dream dresses, planning to go back and narrow my choices down, dress by dress. But then I noticed an alternative way to pay. I could have all the beautiful gowns at once, for only a quarter of the total cost up front.<\/p>\n The service required three subsequent payments at two-week intervals. But if I promptly picked my favorite dress and returned the rest, I\u2019d be off the hook for the second payment by the time it was due. My plan seemed foolproof. As long as I was prompt with my returns and consistent with my payments, I could have what I couldn\u2019t afford. Afterpay quickly became a habit.<\/p>\n [Mac Schwerin: The \u2018buy now, pay later\u2019 bubble is about to burst]<\/p>\n Throughout my childhood, my Dave Ramsey\u2013fearing parents warned me of the dangers of credit cards. They kept their cash in envelopes, and when the envelope labeled Eating Out<\/span> was empty, we\u2019d be enjoying Hamburger Helper for the rest of the month. I didn\u2019t really understand how interest or building credit worked. Afterpay felt like a safer alternative, but it got me used to \u201ccarrying a balance.\u201d When I did get a credit card a few years later, I thought I could pay \u201cin installments,\u201d but compounding interest quickly made my debt mount. Before I knew it, I was paying off only the minimum each month, and drowning in debt.<\/p>\n I was embarrassed to talk about my debt with my friends, but the more I asked around, the more I realized I wasn\u2019t alone. None of the men I asked had ever used Afterpay or its competitors. But many of the women had.<\/p>\n \u201cI remember the first time I used \u2018buy now, pay later,\u2019\u201d one friend\u2014who\u2019s now 27 and owes $16,000 in credit-card debt\u2014told me. It was for a clothing haul before a family trip to Europe during college. \u201cI was like, Okay, I\u2019m gonna return half of this. So I\u2019ll do the four payments so that I can pay a small payment now and not have to cough up all that at the same time. I didn\u2019t end up returning any of it. Shocker.\u201d She said that, like me, she had found installment payments more palatable than putting the full expense on her debit or credit card, but that they led to out-of-control spending, which in turn led to more debt.<\/p>\n Another friend, who first used Afterpay when she was waitressing in college, described it as \u201ca bite-size way to pay for things I couldn\u2019t really afford.\u201d Buying indulgences made her feel guilty; smaller payments assuaged the guilt. \u201cNever once did I think that I couldn\u2019t really pay for these things. The way I budgeted was week to week.\u201d<\/p>\n Lots of our spending was driven by trying to keep up with our friends\u2014not just the real ones, but also the parasocial ones we follow online. Social-media influencers seem to be just like us, only one step and hundreds of thousands of dollars ahead. \u201cThe essence of influencer culture is a kind of low-grade gaslighting about what is possible and what is attainable,\u201d Chelsea Fagan, founder of The Financial Diet, a media organization focused on promoting financial literacy among women, told me. Fagan began a blog to hold herself financially accountable when she found herself in credit-card debt at age 25. Social media leads us to believe that \u201cevery purchase we make now is sort of a micro-expression of identity. Whether it\u2019s the smoothie that we\u2019re drinking or the place that we travel to or the bag we\u2019re holding, all of it is kind of an expression of the type of woman we are.\u201d But \u201cthere\u2019s just such a lack of transparency, and of financial honesty, around it.\u201d<\/p>\n One of my friends\u2014who is in $15,000 of credit-card debt\u2014describes social media as \u201cour generation\u2019s homeownership.\u201d Our feeds, with their photos of meals or outfits, are the way we prove that we\u2019ve made it, she said. \u201cIt\u2019s like our white picket fence,\u201d in a world where none of us can actually afford a house.<\/p>\n Naturally, \u201cbuy now, pay later\u201d companies have invested in influencer marketing campaigns, resulting in a flood of \u201cget ready with me\u201d videos in which women show themselves purchasing products with Afterpay. Many are clearly ads: \u201cHot girls love all kinds of flexibility,\u201d one TikTok comedian says in reference to Klarna; a catchy Cash App\u2013inspired rap goes: \u201cCash App, I can make that cash clap.\u201d<\/p>\n [From the January\/February 2021 Issue: Why is there financing for everything now?]<\/p>\n But other videos masquerade as financial advice: \u201cBasically, you just, like, split your payments up into, like, four manageable chunks, then you pay it over time. It\u2019s called shopping responsibly, okay?\u201d the comedian says in another Klarna-sponsored sketch. \u201cLet\u2019s be real\u2014ticket prices and new clothes really add up,\u201d an influencer says over footage of her attending a music festival. \u201cThis is where Klarna helps me.\u201d In small type, near the bottom of the screen, a disclaimer: \u201cBorrowing more than you can afford or paying late may negatively impact your financial status.\u201d<\/p>\n Lots of people my age<\/span> like to use the phrase girl math to justify reckless spending. It\u2019s only partly a joke. Didn\u2019t buy that $700 Gucci wallet? Now you have $150 to spend on dinner out. Girl math! A man bought your drink last night? Now you have extra money for martinis with your friends. Girl math!<\/p>\n \u201cI hate the idea of \u2018girl math,\u2019\u201d Bola Sokunbi, the founder of Clever Girl Finance, told me. \u201cMath is math. And if it doesn\u2019t make sense as a purchase, it just doesn\u2019t make sense. Don\u2019t put girl on it and make us seem like we are stupid.\u201d<\/p>\n The phrase \u201cmakes it seem that it\u2019s cute or silly to not understand finance,\u201d Haley Sacks, the woman behind the popular Instagram account Mrs. Dow Jones, told me. \u201cIt feeds the stereotypes that money is masculine and women should just spend it.\u201d She said many young women confuse consumerism with empowerment. But \u201cyou don\u2019t want to glamorize being out of control.\u201d<\/p>\n This year, buy-now-pay-later services are predicted to hit nearly $117 billion in transaction volume, thanks largely to young, female buyers. The biggest danger is that \u201c\u2018buy now, pay later\u2019 normalizes using debt to live,\u201d Sacks says in one of her videos. \u201cOne moment, you\u2019re financing your Coachella outfit; the next moment it\u2019s groceries.\u201d And indeed, this is happening more and more frequently\u2014a quarter of \u201cbuy now, pay later\u201d customers say they use an installment-payment service to shop for food.<\/p>\n This summer, though, FICO began including buy-now-pay-later loans when calculating credit scores, and Affirm began sharing its Pay-in-4 customers\u2019 data with the credit bureau Experian. Now that credit scores are directly at stake, savvy customers may opt out of paying in installments. For younger customers desperate to get their hands on the next new thing, it might not matter. It wouldn\u2019t have stopped my 20-year-old self\u2019s shopping spree. But at least buy-now-pay-later loans will be seen as what they always were: debt.<\/p>\n