Everyone is born a mark, and you have to hope you wise up from there. Getting purposefully and repeatedly fooled is one of the fundamental experiences of childhood— by peekaboo, by Santa Claus, by the idea that you’ll grow a watermelon in your tummy if you swallow the seeds. The more kids realize they’ve been fooled, first by caregivers doing some good-natured baby trickery and then by peers at school, the wiser they theoretically get to situations in which they should be wary.
When high school spits kids out into adulthood, they’d better have learned those lessons well—the stakes of being a mark ratchet up considerably along with the legal rights of being a grown-up. Suddenly banks, lenders, student-loan underwriters, and any store hyping a 20 percent discount for opening a new credit card would like to show you your options. The pitches are pretty good, too: No one trying to shake you down at recess was dangling the carrot of shopping sprees or class mobility. If you need to pay for college, rent an apartment, or just buy some jeans, the entire field of credit and lending unfurls before you.
Yet few Americans hit the age of majority with more than a rudimentary understanding of their finances, and the country’s banks are poorly regulated. From 2004 to 2020, student-loan debt metastasized from $250 billion to $1.5 trillion, as the costs of higher education increased but wages in many fields didn’t rise to meet them. Also putting young people into arrears during the aughts: carnival barkers in the quad hawking Visa, Mastercard, and the like alongside free T-shirts and pizza, until the federal government kicked credit-card companies off-campus in 2009 and barred them from sending sign-up pitches offering prizes to those living in college housing.
The new protections, combined with an ambient fear of debt in a country still reeling from a loan-induced economic catastrophe, worked. Young Americans began opening credit cards less frequently; when they did, they missed fewer payments and maintained lower balances than previous generations had. In 2012, only 41 percent of people in their 20s had a credit card, as opposed to more than 73 percent of American households overall. The use of debit cards soared. The marks weren’t so easy anymore.
By 2019, that progress had eroded. The number of 20-somethings with credit cards ticked above 50 percent, and more of them began falling behind on payments. The cost of living was rising, the Great Recession wasn’t so close in the rearview mirror, and people needed and wanted to buy things, even if they didn’t necessarily want credit cards. It was the perfect time for a shiny new gambit from the finance world, and one emerged to meet the moment: point-of-sale lending start-ups like Klarna, Afterpay, and Affirm, or, as many of them prefer to be known, “buy now, pay later” services.
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