A Baltimore aide pays her rent late to keep her credit open for groceries
After her mother's aneurysm maxed out her credit cards, short term loans became her way to cover basics.
The Daily · ‘Buy Now, Pay Later’: A New Wave of Consumer DebtAshley Reed has learned which bill can wait. When money gets tight in the summer, the Baltimore instructional aide lets her rent slide past its due date. She does not miss her buy now, pay later payments.
Reed works a job and a half, supporting classrooms in Baltimore's public schools and assisting in hospital radiology. New York Times reporter Stacey Cowley, who interviewed Reed about her budget, said Reed's story stuck out as Reed walked her through how she uses the loans in her monthly budget.
At first, Reed used the apps for small splurges, like an outfit she wanted. That changed a couple of years ago when her mother had a brain aneurysm. Reed traveled to be with her in the hospital and paid for costs that were not covered, including what Reed called "hotel rooms and ambulance services to get her transferred back." She ran up her credit cards to their limits trying to cover everything.
With her cards full, she began to depend on the apps for everyday bills. Her income also fluctuates. Her teaching job pays for 10 months of the year, so summers leave her stretched and juggling what to pay first.
The loans are helpful, Reed said, but also stressful. "I have to make this payment. I can't be late because, you know, I'm gonna need to use it again," she said.
So she prioritizes the apps over rent. Her landlord is understanding, and she trusts they will be okay if she is late. If she falls behind on a pay later loan, the lender freezes her credit line until she pays up, and she needs that open line to reborrow next month for groceries and basics. "I feel like I'm constantly in, like, this survival mode," she said.
Now she warns others not to follow her path. "Don't get dependent on it like I have gotten myself dependent on it," she said. Even with all that work, she earns a modest five-figure income. As the cost of living rose, the loans became her only way to make ends meet, and she knows she is in a cycle of borrowing, paying down, and borrowing again that is hard to escape.
Questions people ask
What happens if you miss a buy now, pay later payment?
It depends on the lender, but most charge a late fee and will freeze your ability to borrow again until you catch up. Many also use automatic withdrawals from your bank account or debit card, which can trigger overdraft fees if the money is not there. Most short term, pay-in-four loans still do not report regularly to the major credit bureaus, though that is changing.
Why would a landlord accept late rent?
Many small landlords prefer a reliable tenant who pays a few days or weeks late over the cost and hassle of finding a new one. Late fees are often spelled out in the lease, and a landlord may waive or delay them for a tenant with a good history. Unlike an app, a landlord can make a judgment call.
Are there cheaper ways to cover groceries when money is short?
Consumer counselors usually suggest contacting the utility or landlord first, checking eligibility for SNAP food benefits, and visiting a local food bank before borrowing. For medical debt, hospitals often have financial assistance programs that can reduce bills. Nonprofit credit counseling agencies can also help negotiate payment plans without interest.