1 · cost squeeze on essentials
2 · card balances at their limit
3 · installment credit on essentials
4 · cheap-looking installments stack up
5 · fees and repeat borrowing compound
6 · risk concentrates in non-prime borrowers
From cash-flow squeeze to essentials installment lending
Household cash for essential bills fills a revolving-credit tank; when balances hit the limit, overflow moves onto buy-now-pay-later installments that stack, compound fees, and concentrate losses in non-prime borrowers.
cost squeeze on essentials
bills come due
groceries
staple food
rent
largest bill
utilities
power · water
medical
dental · care
revolving
card limit
room to borrow
at the cap
groceries · pay in 4
rent · bi-weekly 0%
utilities · Flex · Zip
medical · POS loan
on essentials
installments stack up
each looks cheap alone
late fee
late fee
late fee
APR climbs
repeat borrowing
more loans, more fees
risk concentrates in
non-prime borrowers