The TikTok Generation Are Going into Debt With ‘Buy Now, Pay Later” Apps

Time to put a zip on Zip? 🤐

If you relate to “Material Girl” by Saucy Santana on an emotional level, and can’t stop scrolling through fashion hauls on TikTok, you probably won’t wanna tread too deep into ‘buy now, pay later’ territory.

Thousands of Gen Z’s are taking to the social media app to laugh/cry about the debt they’ve accumulated through Afterpay, Zip, Klarna and other platforms. Others, namely influencers, are glamorising it as a way to get fashion and luxury items for “free” (spoiler alert: you still very much have to pay for it).

@xxdeiia it be fun till u forget to transfer that $$ out😭 #clothinghaul #shein #afterpay #fashionnova #SchickAsks #CloroxMistChallenge #mehijiii ♬ another one thank you - g

We’ve explained how buy now, pay later apps work and how to use them responsibly, but with this riptide on TikTok, it’s becoming increasingly important for young people to sit up and pay attention.

Research shows that American Gen Z are spending 925% more through point-of-sale services than in January 2020. And according to Afterpay, 73% of this is spent on fashion.

An executive from Afterpay suggested the loans are a way to “budget better”. Meanwhile, young people are staring in disbelief at the triple zeroes on what seemed to be a helpful finance app.

Some are trying to hack the system by cutting off access to their debit cards. Others are being refused important mortgages and bank loans because of their low credit scores.

While it seems like these apps would be doing well for themselves given their popularity, turns out it’s actually kind of grim.

Just last month, Afterpay revealed an interim pre-tax loss of $502 million, up from $76 million a year earlier. Other pay later rivals are not faring much better.

There’s likely to be stronger regulation put in place for these apps—until then, be weary of spending what you can’t afford.