As familiar as Americans are with the concept of credit, many of us, upon encountering a sandwich that can be financed in four easy payments of $3.49, might think: Yikes, we’re in trouble.

Putting a banh mi on layaway—this is the world that buy-now, pay-later programs have wrought. In a few short years, financial-technology firms such as Affirm, Afterpay, and Klarna, which allow consumers to pay for purchases over several interest-free installments, have infiltrated nearly every corner of e-commerce. People are buying cardigans with this kind of financing. They’re buying groceries and OLED TVs. During the summer of 2020, at the height of the coronavirus pandemic, they bought enough Peloton products to account for 30 percent of Affirm’s revenue. And though Americans have used layaway programs since the Great Depression, today’s pay-later plans flip the order of operations: Rather than claiming an item and taking it home only after you’ve paid in full, consumers using these modern payment plans can acquire an item for just a small deposit and a cursory credit check.

[Read: Why is there financing for everything now?]

From 2019 to 2021, the total value of buy-now, pay-later (or BNPL) loans originated in the United States grew more than 1,000 percent, from $2 billion to $24.2 billion. That’s still a small fraction of the amount charged to credit cards, but the fast adoption of BNPL points to its mainstream appeal. The popular embrace of this kind of lending system says a lot about Americans’ relationship to debt—particularly among the younger borrowers who made BNPL popular (about half of BNPL users are 33 or under). “We found that most of the people that use buy now, pay later either don’t have or don’t use a credit card,” Marco Di Maggio, an economist at Harvard, told me. He said that Gen Z was skeptical of credit cards, possibly because many of them had seen their parents sink into debt. Following the ’08 financial crisis, personal debt became a public bogeyman. The elimination of housing wealth for millions of Americans fueled a credit crunch, in which banks tightened credit standards and sharply curtailed their lending. Government agencies such as the Consumer Financial Protection Bureau also strongly discouraged overextension.  

“We have sort of indoctrinated younger borrowers in the idea that having credit-card debt is bad,” Anastasiya Ghosh, a University of Arizona marketing professor, told me. Ghosh’s research involves polling consumers about which method of spending makes them feel the most guilty. “Credit cards are always the worst,” she said. Conversely, when given the option between BNPL and debit, shoppers made no moral distinction. Even the most prosaic items were fair game for financing. Ghosh had assumed people would tend to reserve BNPL “for hedonic things that are harder to justify”—until a control group in one of her studies happily used it on groceries. “They felt absolutely nothing negative,” she said, “which blew my mind.”

Older consumers might see fractured payments on chicken thighs as a sign of financial precarity, but many young people find BNPL’s nuances liberating, Di Maggio told me. They perceive credit cards as encouraging a kick-the-can attitude toward debt, with interest steadily accruing from month to month. (Indeed, roughly 60 percent of credit-card holders don’t pay the full amount on their monthly bills, according to a McKinsey survey.) Traditional lenders profit from sustained delinquency, whereas most BNPL loan terms are fixed at six weeks. BNPL providers can offer zero-percent interest rates because they charge merchants three to four times the average credit-card processing fee. To many Gen Zers, that business model seems less risky than credit cards. It gives them a sense of security that the debt from a purchase won’t balloon from interest and hang over their heads forever.

The tendrils of those credit-card anxieties stretch all the way to Instagram and TikTok, where countless “debt success stories” feature creators digging their way out of credit-card bills. As the reigning king of product placement, Instagram is a crucial node in the BNPL network: #Afterpay is tagged in more than 1.6 million posts on the platform, most of them from brands and influencers hawking apparel. But Gen Z’s lifestyle gurus live on TikTok, where they articulate new modes of consumption in real time—distilling whole philosophies at incredible scale.

To a generation of borrowers, zero interest means free money, and the idea of paying down daily indulgences doesn’t faze many young consumers. “One thing about me? Ima Afterpay that shit,” says the creator behind All Things Naisa on TikTok, where she has more than 130,000 followers. “I don’t care if I have $40 million in my account. I don’t care if the cart came up to $6.74. Afterpay that shit!” The video has almost 180,000 likes. In another video, John Liang, a TikTok influencer with 2.1 million followers, presents the decision to use BNPL as one of pure reason. Standing in front of a green-screened Apple Store, Liang explains that by not paying the total price for a product upfront, he can invest the remainder of his money.

When I pitched this latter reasoning to Di Maggio, he said it made little sense economically and psychologically. He pointed out that investments don’t typically yield appreciable returns over just six weeks. And even if they did, most consumers who find an extra $20 or so in their pocket don’t think to buy stocks or bonds with it—they spend it on something else. A recent study he co-authored supports this notion, finding that BNPL use causes a permanent increase in total spending of about $60 a week, stretching the average household retail budget 30 percent. Another study found that, on paper, people who borrow from these financial-technology firms look as creditworthy as their conventional-banking counterparts, but “after they get the loan, they are much more likely to be delinquent,” Di Maggio said. BNPL delinquency rates are outpacing those of credit cards, and the companies have seen their valuations slashed in the face of waning interest from investors.

[Read: The resurrection of retail]

Many financial-technology firms frame their mission as one of inclusion—they say they’re building a bigger tent for America’s un- and underbanked, which include gig workers and young people with poor credit histories. Klarna, for instance, recently launched a “creator platform” to match merchants with influencers who have access to their target audiences. But because BNPL providers aren’t subject to the same scrutiny as banks (most of them engage in forms of lending not explicitly covered by the Truth in Lending or Dodd-Frank Acts), consumer protections are scant. BNPL programs increase the likelihood of borrowers dipping into their savings and incurring overdraft and other fees. And most of the companies don’t furnish credit-score-boosting data to agencies such as TransUnion, meaning that even if you use BNPL and pay on time, “you have thousands of dollars of debt on your balance sheet that nobody knows about,” Di Maggio said.

What companies like Klarna once characterized as paradigm-busting behavior—young people rejecting stodgy banks in favor of more freeing forms of finance—now looks like the crest of yet another credit cycle, a familiar note in the motif of American consumption. As with young credit-card holders, BNPL users under 25 have the highest default and delinquency rates. If credit dries up in a broader downturn, they are at risk of losing access even to those programs. Meanwhile, they may find that their reliance on these parallel lending methods, which only glancingly intersect with the conventional credit ecosystem, has hobbled their credit history at the worst possible time.

The new debt, in many ways, is exactly the same as the old debt. On TikTok, a small cadre of folks is starting to inch toward denunciation. The opening line of one finance influencer’s video last month: “I’m gonna explain to you why you should never use the buy-now-and-pay-later feature.”

This is an edition of The Atlantic Daily, a newsletter that guides you through the biggest stories of the day, helps you discover new ideas, and recommends the best in culture. Sign up for it here.

Amid the fight for the House speaker’s gavel, it was easy to forget that George Santos is now actually a member of Congress.

But first, here are three new stories from The Atlantic.

The sports scandal almost nobody is talking about Is defying parents the only ethical alternative? Pope Benedict XVI and the Church after the fall

This Guy

Remember Herschel Walker, the Georgia football star who was a shoo-in for a Senate seat—until the press discovered the children he didn’t acknowledge and the abortions he’d allegedly paid for? The Republican Party decided to tough it out with Walker, but the humiliation was too much for voters in a state that sent Marjorie Taylor Greene to Congress, and Walker narrowly lost.

Narrowly. It is amazing to realize that Walker lost by only a few points, when not so long ago, a candidate with his baggage (and inability to speak in coherent sentences) would have simply dropped out of the race. Surely, we’d reached the bottom of what even the most jaded voters would tolerate.

Or so I thought until I started following the improbable tale of George Santos—so far, that does seem to be his name—the weird fabulist who has been elected to the Congress of the United States of America. Almost everything about the life story Santos has told is a lie; likewise, he has not, so far, been able to adequately explain where he got all the money that he poured into his campaign.

As you might expect, this has caused fury in his district, powered a recall movement, and led the national Republicans to act on principle and refuse to seat him in Congress.

I am, of course, kidding. Nothing in that last sentence happened. If George Santos can make stuff up, so can I, but The Atlantic requires that I tell you when I’m joking.

There was a time when congressional candidates generally had to tell at least some of the truth if they were caught lying. Santos is amazing: His double-downs and elisions tumble out effortlessly but pointlessly, even if he does manage to muster a certain amount of boyish charm while stepping on rake after rake. When did his mother die? Well, that depends on what when or die means. Did he work in high finance? Well, not really, but again, it might depend on what high means. Did he go to college? Well, he’s been near a college or two. Close enough. Is he gay or straight, Jewish or Catholic? Did his family die in the Holocaust in Europe? Are they from Brazil, or anywhere in this solar system on our side of the asteroid belt?

You can trip over some fibs in public life, and you can weather a few indiscretions. Normally, however, you cannot survive telling a tale that has more fakery in it than the entire cover story of Philip and Elizabeth Jennings, the two fictional Soviet spies in the TV series The Americans. (At least Philip and Elizabeth have real jobs.) I am not saying that George Santos is a spy or a plant. Deep-cover agents are far more competent than Santos is at … well, everything, but especially at lying.

Even one of Santos’s campaign fundraisers tried the Man of Mystery approach, reportedly presenting himself to GOP donors as Kevin McCarthy’s chief of staff. This might even be a crime, which is probably why Santos, his lawyers, and everyone else have dummied up and refused to answer any more questions about it. But it is revealing that some guy allegedly impersonated the Republican leader’s chief of staff to raise money and gave it to a serial liar who then got elected to Congress—and that this escapade hasn’t been even more of a story.

Like Walker, Santos himself isn’t really the issue. The problem is a Republican Party that has come to expect its voters to put up with anything rather than lose one vote in Congress. And with rare exceptions, this gamble—that the party faithful are either too polarized, too numb, or too inattentive to care—has paid off. This is why Kevin McCarthy had to fight for his political life against the likes of Matt Gaetz and Lauren Boebert and Andy Biggs. Worse yet, it’s why he had to count on Taylor Greene and Donald Trump himself as his allies.

Santos, to his credit, sat there quietly and did as he was told during the speakership fight. (There is an accusation that he flashed a white-power sign when he voted, but even if true, that’s not even close to disqualifying in the GOP these days.) But now that most of the drama is over, no one cares that a complete fraud is sitting in the House. If he’s removed from Congress, it will likely be over money, not ethics; both U.S. and New York State officials are looking into his murky finances. It might have been nice to see the voters and a political party stand on principle, but the Republican project of telling us all to just get used to it is proceeding apace.

Related:

How a perfectly normal New York suburb elected a con man Why the Red Wave hit New York

Today’s News

Intense rains have caused flooding in parts of Los Angeles. At least 15 people have died across the state since late December, and tens of thousands of residents have been ordered to evacuate. The Justice Department launched a review into the discovery of classified documents at the Penn Biden Center for Diplomacy and Global Engagement, where Joe Biden had a private office after serving as vice president. On a surprise trip to Ukraine, Germany’s foreign minister confirmed that Berlin will send more weapons to the country.

Evening Read

Paul Spella / The Atlantic; Getty

Twitter Was the Ultimate Cancellation Machine

By Kaitlyn Tiffany

Whatever else it is, Twitter is a place where the average person can subject others to their displeasure. They have been mistreated by Southwest Airlines. They have been angered by the comments of a man who sells beans. They have learned, to their horror, that the father of their favorite indie-pop star previously worked for the U.S. State Department. In posting about these things in a venue where the target of scorn might actually see the complaint—along with perhaps millions of other people—the aggrieved may experience some instant relief. If you want accountability on social media, you tweet.

Which raises a weird question: If Twitter withers under Elon Musk, where will we go with our beefs? Even before Musk’s takeover, the platform was supposedly shedding its most valuable users; now many others are expected to leave as the platform becomes glitchier and more toxic.

Twitter has never been perfect, but it has been functional. The options for those seeking justice there exist on a spectrum from the silly to the profound; most are somewhere in the middle.

Read the full article.

More From The Atlantic

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Culture Break

Geoffrey Short / Universal Pictures

Read. The first three books from Atlantic Editions, our new book imprint: essay collections by Atlantic staff writers Sophie Gilbert and Megan Garber, and senior editor Lenika Cruz.

Watch. M3GAN, in theaters, a zany horror film starring a killer-robot doll that is just what 2023 needs.

Play our daily crossword.

P.S.

When I was a boy, I loved astronomy. I even had a telescope for a while. I was never very good at using it, and I could really focus only on the moon. But I still remember the thrill of using a lunar map to find the landing sites of the Apollo missions and some of the earlier unmanned probes. I did manage to spot Mars—it was just a fuzzy red disk—but I was (and remain) a science-fiction nerd, and so, after years of watching Star Trek and reading The War of the Worlds, I felt like I was peering into a dangerous mystery.

I am older now, and when I look to the sky, the beauty of the stars is tangled up in questions about eternity that these days, as you might imagine, seem more pressing to me. Perhaps this is why I find myself boyishly excited all over again about the approach of a green comet that last visited Earth some 50,000 years ago. There is something comforting in thinking of the universe as a cozy place where a comet, last seen by Neanderthals, returns to find us a spacefaring species. We spend so much time worrying about our own extinction that it’s a relief to think of ourselves as the descendants of creatures who might well have looked up with the same wonder as I will soon, and the ancestors of beings whose lives we cannot even yet imagine. Fifty thousand years isn’t an eternity, but for me, it’ll do until eternity gets here.

— Tom

Isabel Fattal contributed to this newsletter.

The first three books are publishing today from Atlantic Editions, a first-of-its-kind book imprint launched as a partnership between The Atlantic and the independent publisher Zando, with titles from staff writers Megan Garber and Sophie Gilbert (a finalist for the 2022 Pulitzer Prize in Criticism) and senior editor Lenika Cruz. This new line of paperback books features definitive essays by Atlantic authors; each is themed on a single consequential topic. The imprint draws from The Atlantic’s rich literary history and represents a new venue for publishing Atlantic writers, incorporating both contemporary articles and classic storytelling from the magazine’s robust archive.

The first three books are Megan Garber’s On Misdirection: Magic, Mayhem, American Politics; Sophie Gilbert’s On Womanhood: Bodies, Literature, Choice; and Lenika Cruz’s On BTS: Pop Music, Fandom, Sincerity. They offer their definitive writing on, respectively, our fractured attention amid the constant churn of our internet age, womanhood in pop culture, and the cultural influence of BTS as the world’s biggest band.

Three additional titles will be published in April 2023: On Grief by Jennifer Senior, featuring her Pulitzer Prize–winning story about one family’s search for meaning after the loss of their son on September 11, 2001; On Work by Derek Thompson, collecting his seminal essays about the future of work, technology, and culture at an inflection point in the history of labor; and On Nobody Famous by Kaitlyn Tiffany and Lizzie Plaugic, the tales of two writers’ lives in New York City, written in the authors’ characteristic irreverent and hilarious prose. All six current Atlantic Editions titles are available for order or pre-order now.

Through this partnership, Zando and The Atlantic seek to bring these stories to a wider audience by offering the books at an affordable cost and making them accessible as individual, definitive works.

Zando was created by Molly Stern to connect inspiring authors to the audiences they deserve, and to help readers find new books to love. Zando published its first titles in 2022—including the New York Times best-seller The Butcher and the Wren by Alaina Urquhart, You Are Not Alone by Dr. Ken Duckworth, All the Secrets of the World by Steve Almond, Patricia Wants to Cuddle by Samantha Allen––and has announced additional publishing partnerships with Gillian Flynn, Lena Waithe, John Legend, Sarah Jessica Parker, and Ayesha Curry.

In 2022, The Atlantic unveiled a dramatically expanded Books section devoted to essays, criticism, reporting, original fiction, poetry, and book recommendations, and in December 2022 debuted The Atlantic 10, a new end-of-year list composed of 10 books that made The Atlantic’s writers and editors think the most that year. Books and literature are foundational to The Atlantic’s mission, dating back to its founding in Boston in 1857 by a collective of America’s greatest celebrated transcendentalist writers.

Press Contacts:
Anna Bross and Paul Jackson, The Atlantic
press@theatlantic.com