The Danger of Buy Now, Pay Later

We chase money, thinking it'll bring security. We seek success, hoping it'll satisfy. But Ecclesiastes exposes the truth. Wealth alone never delivers.

Lasting contentment isn't found in what we own, but in a personal relationship with wisdom himself, Jesus. By going to faithbuy.com slash give. We'll explore the hidden dangers of buy now pay later programs.

Then it's on to your calls at 800-525-7000. This is faith and finance biblical wisdom for your financial decisions. Well, we've talked before about buy now pay later options, BNPL for short, and how they often lure folks into debt. But what was once reserved for large purchases is now showing up in surprising places, like your next fast food run. Believe it or not, DoorDash now allows users to split food orders into four equal payments. Yes, your cheeseburger, fries, and drink can now be financed. If that reminds you of the old Popeye cartoons and the character Wimpy saying, I'll gladly pay you Tuesday for a hamburger today, you're not alone.

The difference is Wimpy was a joke. DoorDash is real. And the idea that you'd need a payment plan for a sandwich, that's not just humorous, it's alarming. Buy now pay later has moved far beyond furniture and electronics.

It's baked into the apps we use every day, from fashion retailers to grocery delivery. Klarna, Afterpay, Affirm, Zip, Sezzle, and PayPal are just a few of the major players fueling the rise of pay later options. In fact, according to Experian, more than 80% of US shoppers have used some form of buy now pay later programs. The Consumer Financial Protection Bureau has already warned that users who buy now and pay later are more likely to carry multiple balances, overdraft their accounts, and experience financial stress. Why?

Well, because it feels easy. It doesn't feel like debt when you're just approving four easy payments, but multiple purchases across several platforms can quickly stack up, and you don't realize the wait until it's too late. And make no mistake, these programs aren't interest-free forever. Many of these services charge interest rates as high as 36% if payments are missed or extended.

Let's look at a practical example. Say you order $60 of takeout through DoorDash and choose the pay later option. Well, that's $15 every two weeks. But if you're doing this with multiple meals a week and a couple of other online purchases, well, that adds up fast. Suddenly, your affordable splurges are competing with your rent. Or imagine buying a $3,000 couch through a buy now pay later service. If you miss a payment, interest kicks in, and now you're making minimum payments at 25% interest.

That couch could end up costing nearly $8,000 after all is said and done. So what does scripture have to say about this? Well, first, the Bible repeatedly warns us about the dangers of debt. Proverbs 22, 7 tells us the borrower is the slave of the lender. And that's not just financial, it's emotional and spiritual too. Debt can bring unnecessary stress to your life, distract your heart, and divide your devotion to God. Second, we must examine why we're tempted by these offers. Do we really need the item or are we just chasing convenience, comfort, or status? Are we acting from faith or impulse? In Philippians 4, 11-13, Paul writes, True contentment isn't found in the ability to purchase. It's found in trusting God to meet our needs. So how do we respond?

Well, practically. Build margin. If you want something like a couch, a new laptop, or even a nice meal, budget for it. Save in advance. Set up an automatic transfer into a want category and pay with cash when the time comes. You'll enjoy the purchase so much more when it's not followed by regret. And for those everyday cravings like takeout or impulse buys, try setting a weekly cash limit.

Once it's gone, it's gone. The second way to respond is spiritually. Ask God to help you examine your heart. Are you trusting Him with your provision or trying to manufacture your own comfort? Is your spending a reflection of contentment or a cover for something deeper? So the next time you see a pay and for button under your cart pause, ask yourself, do I really need this? Am I able to pay for it in full? And most importantly, does this reflect trust in God or trust in a payment plan?

Avoiding unnecessary debt isn't just about protecting your finances, but also about protecting your freedom to live generously. All right, your calls are next. The number 800-525-7000.

That's 800-525-7000. This is Faith and Finance. We'll be right back.

Stick around. This resource will help you grow in how you handle wealth by deepening your trust in God. Request your copy of the Wisdom over Wealth study with your gift of $35 or more by going to faithfi.com slash give. Feeling burdened by credit card debt? As faithful stewards, we are called to manage our finances wisely. Christian Credit Counselors can help with a debt management program that allows you to pay off debt up to 80% faster while honoring your commitments with integrity. Don't let debt hold you back from the life God has planned for you. Take the first step toward peace and financial freedom today. Visit christiancreditcounselors.org.

That's christiancreditcounselors.org. Great to have you with us today on Faith and Finance. We've got lines open. We're ready for you. 800-525-7000.

Again, that's 800-525-7000 you can call right now. In the news today, FICO is reporting that for only the second time in a decade, the national average credit score has fallen. The average FICO score now stands at 715.

That's a one point drop from January and a full two points below the average score a year ago. That still leaves the nation's average credit score in FICO's so-called good range but borrowers with that low a score will likely face higher interest rates and may need to put more money down before securing a loan. To get the lowest interest rates and greatest chance for approval, borrowers generally need a FICO score of at least 760. FICO says two key factors contributed to the score drop. Number one was resumption of student loan reporting. So after a multi-year pause under the CARES Act, as of February, federal student loan delinquencies are once again being reported on credit files. And then secondly, higher interest rates leading to a rise in delinquencies. The share of borrowers with a 90 plus day delinquency on the books increased to 8.3% in February.

That's the first time this figure surpassed pre-pandemic levels. Here's what I would say. If you're struggling to keep up payments on consumer debt, I would urge you to seek out some counsel for that. My preferred approach to get out of credit card debt once and for all, especially if that balance is north of say $4,000, is really Christian credit counselors. Debt management is the best way. Different than debt consolidation where you take out a new loan and roll it all up into one new loan with a lower interest rate.

My experience is that doesn't lead to long-term success. It often extends the payback term and even with the lower rate, it takes the pressure off, which often doesn't involve the borrower solving the problem that got them in the debt in the first place. And therefore, the credit card debt ends up coming back, but now they've got a consolidation loan on top of it. The other often referred to approach to paying off debt would be a debt settlement.

I don't like that at all. That's where you stop paying, you get into a past-due status, even collections, and then the debt settlement company will come behind you in that situation and try to negotiate a payoff. It trashes your credit. It could put you in a legal spot where they go after you and attempt to sue you in the process.

It's just not something you want to be a part of. So that leaves debt management. That's where you go into an existing program, but you have to use a nonprofit credit counseling agency. They drop the interest rates often to somewhere between 0 and 10 percent. And you make one monthly payment to the credit counseling agency. They pass it on to your creditors.

Combination of that level monthly payment, the lower interest rate is going to help you pay it off 80 percent faster. Our preferred partner there, and they have been for decades, is Christian Credit Counselors. They're a not-for-profit, they're all believers, and they'd love to serve you.

You'll find them at christiancreditcounselors.org. All right, let's go to Cleveland, Ohio. Hi Susie, I know you've been waiting patiently.

Go right ahead. Thank you for taking my call. My husband and I are sending our son off to Scotland for a missions trip for five weeks, and we are personally out of credit card debt and want to help our children be out of it too and never have it.

So I'm hesitant to get a credit card, but we're trying to figure out the best way to send him off and have money reliable and safe and all that kind of stuff. So I thought we'd call and see what thoughts you guys had. Yeah, well done. I'm delighted to hear he's going on a mission trip. That's great. Is this with your local church? Yes, well, it's just him, but it's with a family that we support at our local church, yes. Yeah, okay, excellent.

That's great. Yeah, so I think, I mean, a couple of options here. One is, you know, just help educate him on some of the best practices with regard to how he safeguards whatever he has, whether that's a debit card or cash, you know, just kind of keeping it on his person. Maybe, you know, it's in a travel pouch or something he has, you know, accessible but also safe rather than a, you know, a wallet or a phone in a back pocket that could be compromised. You know, I think with regard to a debit card, that could be a great option. You know, we've had, as far as a debit card goes, the Capital One money card for our kids. It's the teen money account and, you know, it has no fees, it has no minimums, it has a great smartphone app that both you as the parent and the child, although he's 18, so he's an adult now, but you can both have access to it. Very easy through the app if he were to lose it at any point with the touch of a button to essentially turn it off so it can't be accessed any longer. You know, the nice thing is that that will have the tap to pay feature which provides some additional safeguards because the contactless payment protects against what are called skimmers because it sidesteps the physical vulnerabilities that these fraudsters exploit. So, you know, when you're putting it into the reader, whether it's a magnetic stripe or the chip, but you're inserting it, you know, they can use something called NFC to kind of skim that information, but the no physical contact makes it more difficult, so it adds, through the technology, a layer of protection there. So I would say, you know, equipping him with some best practices, you know, some cash that, you know, preferably you get exchanged into the local currency before he goes.

Maybe it's your local bank, they might need to order it, so give them time. And then with a debit card where he knows that he or you can turn it off, you can also add more money to it if you need to. With the contactless payment options, we'll probably, you know, give him everything he needs. Okay. Wonderful. We really appreciate you. Thank you so much.

Absolutely. Listen, tell them have a great trip, Suzy, and thanks for your call today. I will.

May God bless you. Thanks so much, Rob. Absolutely.

Let's go out to Virginia. Hi, Richard. Go ahead.

Hi. I've just got a question. I'm trying to balance out biblical priorities. We have always paid our tithes on the gross, and we got out of debt, saved for another primary home, but we ended up having to get into a small mortgage to get that primary home. So we've been in it for a little while, and it's got some repairs that we have to get done to maintain the home.

And it just dawned on me. I'm wondering when we sold the other home and bought this home, there was a profit. It's not taxable. But I'm wondering if we should be paying a tithe on that. I'm trying to balance that with stewardship of maintaining the home because these repairs have to be done.

And like I said, we still have a small mortgage, so I'm also balancing that with priority of paying off debt. And I'm just wondering with those three things, is it necessary to pay a tithe on that? Yeah, the two homes are unrelated when it comes to a tithe. So I love the fact that you've been a consistent tither.

That's great. A tithe is on the increase. The word tithe means a tenth, even though in the Old Testament there was multiple tithes, in fact three of them. But if you want to honor the Old Testament tithe, and I like that, as a starting point for your giving, giving systematic on the increase, it really wouldn't affect that new home purchase. You would simply look at that prior home and you would say, what was the increase? And the true increase would be the selling price minus any improvements that increase the value of the home, minus the selling price, or excuse me, minus the original purchase price. So sale price minus improvements over the life of the home minus the original purchase price. That's going to be your increase.

And if you wanted to tithe on it, that's what you would give on. We do have some lines open. If you have a financial question today, get in the mix.

800-525-7000. We'll be right back. We are grateful for support from Praxis Investment Management. Since 1994, Praxis has offered investment products designed to meet practical needs for everyday investors seeking to steward their assets consistent with their desire to promote positive social and environmental impacts. Praxis aims to bring a faith-based approach to ETFs, mutual funds, multi-fund portfolio solutions, and money market accounts reflecting their 500-year-old Anabaptist Christian faith tradition.

More information is available at praxisinvest.com. Great to have you with us today on faith and finance. We've got room for you today. If you have a question here in our final segment, something financial that's on your mind, go ahead and call right now. 800-525-7000. That's 800-525-7000. We'd love to hear from you today. To Arkansas. Hi, Debbie. Go ahead.

Yes, sir. I am recently retired from teaching and I have a couple of annuities. I'm in the teacher retirement, but I have a couple of annuities that I have bought into a long time ago.

And one of them, I'll just tell you, it's one of them was $19,000 or so and the other one's $13,000 or something like that, $13,000. I was thinking about putting them together, rolling one over into the other. Or is there something better that I could do? Because I recently opened an IRA to put some money into this kind of a tax advantage. I don't know whether to roll it into that or if I should keep them in an annuity or I don't really need the money that much. But, you know, just kind of wanted to see it grow a little bit.

Yeah, no, I can certainly appreciate that. You know, I think it really comes down to ultimately how you want this money invested, because there absolutely is a process by which you can combine annuities into a same type. You know, so fixed to fixed if you have a fixed annuity going into a fixed annuity and there can it can be done without tax penalties. Do you happen to know whether this is what's called a qualified annuity where the money went in pre-tax?

It was pre-taxed, yes. OK. Yeah. So you absolutely could roll these to a new qualified annuity. And the reason you'd want to do that is if you want to take advantage of the benefits of the annuity, which is basically, you know, you're willing to give up some upside in exchange for a guaranteed rate of return or at the very least a floor. You're willing, you know, to lose liquidity because you've got other assets because by, you know, for all intents and purposes, annuities are illiquid.

They have surrender periods of anywhere from two to 10 years. So you want to make sure you don't need the access to the money. And if you're willing to give that performance trade off where, again, you take a little bit of a lower return, but you don't have the risk on the downside and that gives you peace of mind. And, you know, you like that approach, especially alongside the other assets that you have your retirement with the teacher's pension and then your IRA, then I think, yeah, that could be a great way to go. And you use what's called a 1035 exchange to combine those and your annuity company could give you the paperwork to do that. And that would not be a taxable event.

So, I mean, I'm certainly on board with that. I think it ultimately comes down to what is the best investment for you in this season of life moving forward. And if you're unsure of that and want to explore some other options, perhaps connecting with an advisor who could walk you through all of that and give you alternatives because the other approach would be rather than combining the annuities, it would be to roll the qualified annuities over to your IRA or to a new IRA. And so you could combine them together into a single IRA, whether that's the one you already have or another one.

And then if you had an advisor overseeing that money, you know, you'd have complete discretion over what investments to choose, which gives you the ability to get a little better return, even though you're certainly adding risk. Well, at this point, they're just guaranteed it won't go any lower than 3%, both of them. And they are on fixed. So they're fixed interest. So they're, you know, they're making minimal money. But if I roll them into another IRA, I just bought a local one from a local bank, but if I rolled it into another IRA, what would be the recommended?

I have no clue where to go or, you know, what to do there. That's a good question. How much would you have total investable assets at that point? You mean from the two annuities? The two annuities plus the IRA. Oh, plus the IRA, about $27,000. Okay. So you would be beneath what you would need to hire an advisor to manage that.

A lot of times their minimums are $75,000 to $100,000. So you'd have a couple of options there. I mean, one of the benefits of the annuity is it takes some of the guesswork out. But, you know, if you wanted to invest it and get it growing, and you were willing to take a little bit more risk for more return, then you'd probably, you know, want to either pick one of the faith based investing mutual funds. You know, you could go to a robo advisor, you could even connect with our friends at sound mind investing. Any of those would offer you a guided approach to that. But it would put the onus back on you to ultimately make those decisions, which, you know, I understand can be less appealing.

And so that's where the annuity might, you know, take some of that guesswork out. Okay. All right.

Well, that's super. I surely appreciate it. And you have a wonderful day. I appreciate you so much. Thank you, Debbie. I appreciate you. And thanks for calling today. Lord bless you. To Park Ridge, Illinois. Hi, Angie.

Go ahead. Hi, yes, I am calling regarding a large cash property inheritance I've just received. I need help, I guess, what your suggestion would be so as not to be taxed. Well, there is no federal inheritance tax paid by beneficiaries, which would be what you are. So if you're the one receiving the inheritance, there is no federal inheritance tax. It's possible the estate that you know, where the person passed away may owe federal estate taxes prior to you getting the money, but that wouldn't be you that would be the estate and that would only be if the estate was valued at more than $13 million per person.

Now, six states do have an inheritance tax, Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania, but not Illinois. So you shouldn't have any taxes on this. I recently last year, when I found my income taxes, I filed independently to kind of hash out where I was and I debt inheritance was around 150,000. I ended up paying something like $18,000 in taxes.

Yeah, I'd be a little confused about that. I mean, the only time you have taxes triggered related to an inheritance would be if it's an asset that appreciates after you receive it, because right now, inherited assets like stocks and real estate get a step up in basis to the fair market value as of the date of death. So if you sell it right away, there's no capital gains tax. And again, there is no federal inheritance tax that's paid by beneficiaries, which is what you would be.

So, you know, maybe there's some element of this that I'm, you know, not aware of in terms of what's going on in your situation. But you shouldn't have paid tax just by virtue of you receiving an inheritance, because there is no such thing. Okay, thank you so much.

I will call the accountant that did the taxes. Have a wonderful day. How are you doing today, Rob? Good. Thank you. I have a question for you.

Me and my wife, we paid off our house in October 2024. And I feel like there's something else that we need to do. Do we need to put that deed in our title, have it in hand? Because I've been hearing about this title insurance fraud thing that's been going on since the identity and getting loans out in your home.

Yeah, you know, I would probably I wouldn't worry about that. I mean, there is title monitoring. So there's something called home title lock, which is a little bit of a misnomer. It's a monthly subscription between 20 and $30, where they'll monitor your county's records for under authorized changes. You can do that yourself. And in fact, most counties now offer an automated alert if you set it up.

So I'd probably go to your county recorder's offices website and just see if they have the alert that you can set up on your deed. So if something changes, they'll let you know. Hey, congrats on paying off that loan, Eric. Thanks for your call today. Folks, thanks for being along with us today. Hope you come back and join us tomorrow. We'll see you then. Bye bye. Faith and Finance is provided by Faith Buy and listeners like you.