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Buy Now, Pay Later (BNPL) is Booming

Dec 18, 2023

In Episode 85,  we delve into a fascinating headline from early December published by CNN: ‘It’s lending on steroids’: How Buy Now, Pay Later companies are meeting an influx of demand despite higher costs.

What does “Lending on steroids” mean? In economic terms, this expression suggests that loans are being made at an unusually rapid and vibrant pace. Steroids, typically associated with bodybuilders for artificial muscle gain, here metaphorically describes the accelerated rate of lending. The headline indicates that Buy Now Pay Later companies are responding to a significant increase in demand.

These modern-day companies provide third-party financing for consumers, offering easy terms, reminiscent of the old furniture store ads promoting “No money down, don’t make your first payment until a later date.” This easy financing, now facilitated by internet and app technologies, presents a convenient alternative for consumers who prefer not to use credit cards.

Moving on to the article, it highlights the evolving landscape of holiday spending. Traditionally dominated by credit cards, the spotlight is now shared with Buy Now, Pay Later (BNPL) companies. These are often referred to as BNPL companies, for the initials of Buy Now, Pay Later. On Cyber Monday, BNPL purchases soared, reaching an all-time high. BNPL companies, like credit cards, allow customers to make purchases without immediate funds, offering interest-free installments over a typical six-week period. However, late payments may incur fees, and longer payment terms might attract high-interest rates.

Despite most customers meeting their payment schedules, there’s been a slight uptick in late payments. The focus now is on fostering relationships with reliable customers to encourage repeat transactions, which helps BNPL companies assess lending capabilities more accurately. And by ‘fostering’ relationships with customers, I mean ‘beginning and developing’ relationships. Fostering.

The article also touches on the shift from zero-interest loans due to rising interest rates and how BNPL companies are reworking terms with retailers to balance their income sources from user interest and retailer fees.

Here’s an idiomatic expression that ties in with our topic: “Don’t bite off more than you can chew.” It cautions against taking on more responsibility or debt than one can handle, relevant to both consumers and BNPL companies in this context.

As we wrap up, I wish those celebrating Christmas a very merry one. For others, I hope the holidays provide a chance to relax with family and friends. You can read the full article on the CNN website or find the link at, where you can also sign up for lesson alerts. Make learning English part of your 2024 goals, and remember, setting an annual target is a great motivator.

Thank you for joining me today. Take care, and I’ll be back soon with another episode of English for Economists. Bye for now.


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