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How the Pandemic Boosted ‘Buy Now Pay Later’ | Intelligence, BoF Professional



NEW YORK, United States — Early on in the pandemic, Rachel Gannon noticed customers on her off-price website, Cara Cara, were shopping differently.

Rather than pay for their purchases upfront, they were opting to pay in monthly instalments stretching out as far as three years. Gannon had begun to offer a “buy now, pay later” option in November, using Klarna, a Swedish payment services firm. But usage doubled during the pandemic. Those customers also tended to spend more.

“People spend more money when they don’t have to pay it all upfront,” she said.

The pandemic has been a boon for instalment-payment companies. Customers who select this option during checkout are effectively taking out a small loan to finance their purchase, which they pay back over periods ranging from a few weeks to several years.

Even before Covid-19, a growing number of retailers were introducing “buy now, pay later” plans, from fast fashion to luxury. But demand has exploded during the lockdowns when consumers turned to online shopping in record numbers. Brands see instalment plans as a way to keep consumers spending in a bad economy. They hope instalment plans will bring in new customers and increase average order values.

Asos, Drunk Elephant, La Mer and American Eagle are among the brands that signed up with Afterpay during the pandemic. Sephora, The North Face and Adidas joined Klarna. Signet Jewelers and Oscar de la Renta are among the new clients of Affirm, a smaller, San Francisco-based start-up that is eyeing an initial public offering, according to the Wall Street Journal. Sydney-based Afterpay, the biggest of these firms, saw revenue more than double to $3.8 billion in the quarter ending June 30, compared with a year earlier.

Being able to spread purchases out over several weeks without interest might be extra comforting.

“During the quarantine period in 2020 more people may be watching their weekly budgets,” said Lucia Perdomo-Ruehlemann, chief marketing officer at skincare brand Drunk Elephant, which added Afterpay after receiving numerous requests from customers. “Being able to spread purchases out over several weeks without interest might be extra comforting.”

Most of these lenders were founded after the 2009 recession, and have yet to be tested by a weak economy, which will likely trigger a higher rate of missed payments and add to criticism that instalment plans encourage consumers to spend beyond their means.

And though it’s the lenders, not the retailers, that take on the financial risk, consumers may blame brands anyway when interest and late fees start piling up. Customers typically pay no interest on short-term loans, though annual percentage rates can top 20 percent depending on the borrower.

“There is a real fear and concern when you are giving up some control of the customer experience to a system that you don’t fully manage,” said Jake Makler, head of partnerships at Quantum Metric, which provides data and analytics to fashion brands like Lululemon and Neiman Marcus.

A Meteoric Rise

Instalment plans are only the latest way retailers have extended credit to their customers. Layaway, where customers would put purchases aside until they paid for them in full, became popular in America retail during the Great Depression but faded with the emergence of credit cards. Retailers issued store credit cards starting in the 1980s, but their popularity waned after the 2009 recession when more customers began missing payments.

For fashion, these companies solve an age-old problem: their best customers, young people, also tend to have the least spending power. Young shoppers saw their earning power crimped by the last recession, and are more likely to be saddled with debt from student loans. Many see instalment plans as less intimidating than credit cards. Some 23 percent of Millennials don’t have credit cards, according to TD Bank.

“These shopping loans are very appealing to Millennials and Gen Z, especially right now,” said Kimberly Palmer, a personal finance expert at consumer finance site NerdWallet. “A lot of young people don’t have credit cards, either because they have bad credit … or because they are making a choice to avoid debt.”

A lot of young people don’t have credit cards, either because they have bad credit or because they are making a choice to avoid debt.

These lenders target younger shoppers with marketing heavy on Millennial pink and partnerships with brands like Revolve and Kylie Cosmetics. Next week, Klarna will team up with the women’s magazine Cosmopolitan to host a virtual “Hauliday” shopping event.

In just a few years, buy now, pay later has gone from a niche offering to e-commerce table stakes. Personal loans in the US have doubled since 2014, topping $161 billion last year, according to consumer credit reporting agency TransUnion. David Sykes, head of Klarna in the US, said he expects buy now, pay later to “achieve Paypal-like levels of ubiquity within the near term.”

“Klarna’s long term ambition is to sit at the intersection of retail, banking, and payments,” he said.

Why Retailers Sign On

Instalment plans aren’t cheap for retailers, which typically pay 4 to 6 percent of each transaction, compared with 1 to 3 percent for Visa or Mastercard.

Some retailers say the service attracts new customers and convinces them to spend more.

“Today, you have to give lots of flexibility to shoppers, and this is one of the expectations,” said Carl Cunow, co-founder of luxury swimwear brand Onia. Cunow has personally financed purchases with Affirm and offers Klarna for Onia. “Everyone is also kind of watching what everyone else is doing, so you need to keep up.”

Today, you have to give lots of flexibility to shoppers, and this is one of the expectations.

Installment-plan providers also promote the brands they work with through their own payment apps as well as advertising campaigns. That’s proven a big draw, particularly for smaller brands. These firms also pitch themselves as helping with customer retention; Affirm says 67 percent of its shopping loans are made to repeat customers.

“We think of them as a marketing partner … they are reaching out to audiences for us that we probably don’t reach, or can’t afford to reach,” said Dan Clifford, chief marketing officer of Mansur Gavriel, which has used Afterpay and now uses Klarna.

Nothing Is Free

Direct-to-consumer jewellery brand Mejuri started using Klarna in November, but the company hasn’t seen a meaningful uptick in return customers, said President and Chief Operating Officer Majed Masad.

As the buy now, pay later industry has grown, it has also drawn criticism for pushing younger shoppers into debt. In the UK, Stella Creasy, a member of parliament, has called on regulators to investigate whether these services deceptively market themselves as risk-free to young and uneducated shoppers.

“Most customers don’t realise that borrowing money is never free,” said Palmer of NerdWallet. “And of course, brands don’t want to be associated with people taking on debt and getting into financial hardships.”

Brands don’t want to be associated with people taking on debt and getting into financial hardships.

Greg Fisher, Affirm’s chief marketing officer, said the company is invested in “helping people build their financial wellness,” which is why he said the company doesn’t charge late fees. Molnar of Afterpay said the company targets a more financially fluent consumer — the average Afterpay user is in their mid-30s — and added that its user’s loss rate was about 1 percent, “which is significantly lower than using credit products.”

Klarna’s Sykes said the company takes “being a responsible lender extraordinarily seriously,” and that the $150 average order value through the service is a “manageable amount.” Last year, Klarna debuted a campaign, “Mindful Money,” to promote responsible spending. Afterpay and Klarna shut off users’ accounts if they are late on payments so that customers cannot make additional purchases.

The industry isn’t immune to the effects of the pandemic, though.

It’s entirely possible that many consumers will end up defaulting on the shopping loans they are taking out now.

“Given the current economic instability and financial fragility of many Americans, it’s likely that an increasing number of Americans will struggle to pay their bills,” NerdWallet’s Palmer said. “It’s entirely possible that many consumers will end up defaulting on the shopping loans they are taking out now, which does mean these companies are taking on more of a risk.”

Small brands in particular also need to weigh the benefits of offering instalment plans against the expense.

“You have to be mindful of the costs because they do add up when you are running a small business,” said Cara Cara’s Gannon. “Your margins can be diminished in a minute.”

But for some brands, the benefits outweigh the costs, as these services fill a need. Clifford of Mansur Gavriel said the fees can be equivalent, or even sometimes less than acquiring customers via social media. Young consumers also want to keep shopping but might not have access to credit.

“This is a generation who has shifted the way we pay,” said Nick Molnar, co-founder and the US chief executive of Afterpay. “They want to be empowered to spend their money.”

Related Articles:

How Shopify Conquered Fashion

Off-Price Retailers Are Now Selling Online. Will Shoppers Follow?

How Amazon Could Upend the Luxury Fashion Sector

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Indigo Platinum Mastercard Review | NextAdvisor with TIME



We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

Indigo® Platinum Mastercard®

Indigo® Platinum Mastercard®

  • Intro bonus: No current offer
  • Annual fee: $0 – $99
  • Regular APR: 24.90%
  • Recommended credit score: 300-670 (Bad to Fair)

The Indigo Platinum Mastercard can help you build a better credit score (if you practice good credit habits) with monthly reporting to the three credit bureaus. Unlike many other options for building credit, this is an unsecured credit card, so it doesn’t require a cash deposit as collateral. But you may incur an annual fee, depending on your creditworthiness when you apply.

At a Glance

  • Monthly payment reporting to the three credit bureaus for people with limited credit history or poor credit
  • Annual fee of $0, $59, or $75 the first year, depending on your creditworthiness ($75 version charges a $99 annual fee after the first year)
  • Unsecured credit card with no security deposit required
  • Standard variable APR of 24.9% 


  • Available to individuals with no credit history or low credit scores

  • Unsecured credit card

  • Annual fee could be as low as $0 depending on your creditworthiness

  • Monthly payments report to all three credit bureaus


  • No rewards

  • Annual fees vary depending on creditworthiness, and you won’t know your fee until you apply

  • High variable APR

  • $300 credit limit

Additional Card Details

The Indigo Platinum Mastercard is geared toward people with “less than perfect credit” or minimal credit histories. Like other credit-building card options, it doesn’t offer a lot of perks.

You will get a few benefits, like online account access and reporting to all three credit bureaus (Equifax, Experian, and TransUnion). You can also choose from multiple card designs for no extra charge.

Prequalification is another benefit of the Indigo Platinum Mastercard. Prequalifying is a great way to gauge your approval odds and the terms of your offer without filling out a full application and undergoing a credit check, which can temporarily hurt your credit score. If you do choose to apply after pre-qualifying, you’ll still be subject to credit approval with a hard credit inquiry.

Should You Get this Card?

Many credit cards available to people with bad credit scores are secured credit cards that require a cash deposit as collateral. The Indigo Platinum Mastercard offers an alternative to secured cards for building better credit, but has its own drawbacks.

For one, your credit limit is capped at $300. If you’re approved for a version of this card with an annual fee, it’ll be automatically applied, which means your starting limit could be as low as $225. 

The annual fee itself is another drawback. The amount you’re charged will depend on your creditworthiness when you apply. If your approval comes with an annual fee, that $59 or $99 ($75 the first year) charge can quickly add up over time. Consider other cards with no annual fee (and even no annual fee secured credit cards) that may make better long-term options for building a healthier credit profile.

How to Use the Indigo Platinum Mastercard

Because the Indigo Platinum Mastercard doesn’t offer any rewards and your credit limit is just $300, you should use this credit card for the sole purpose of improving your credit score. Only make purchases you can afford to pay off when your statement is due, and pay your bill on time to avoid up to $40 in late fees and a penalty APR up to 29.9%. 

Pro Tip

Building a great credit score, whether you’re starting from no credit history or repairing damaged credit, requires a foundation of good credit habits your credit card can help establish — such as timely payments, low credit utilization, and paying off your balances in full each month.

The Indigo Platinum Mastercard’s low credit limit means you’ll need to be extra careful with your spending to improve your credit score. Using more than 30% of your available credit can hurt your credit utilization rate — one of the most influential factors in your credit score. With a credit limit of $300, that means you should keep your charges below $90.

The goal of a card like Indigo Platinum Mastercard is to, over time, improve your credit score enough to qualify for a better credit card. Use this card to establish and maintain the healthy credit habits (like timely payments in full, low utilization, and consistently paying down balances) that will improve your credit long-term, and help you qualify for a card that’s better suited for your spending habits in the future.

Indigo Platinum Mastercard Compared to Other Cards

Indigo® Platinum Mastercard®

Indigo® Platinum Mastercard®

  • Intro bonus:

    No current offer

  • Annual fee:

    $0 – $99

  • Regular APR:


  • Recommended credit:

    300-670 (Bad to Fair)

  • Learn moreexterna link icon at our partner’s secure site
Citi® Secured Mastercard®

Citi® Secured Mastercard®

  • Intro bonus:

    No current offer

  • Annual fee:


  • Regular APR:

    22.49% (Variable)

  • Recommended credit:

    (No Credit History)

  • Learn moreexterna link icon at our partner’s secure site
Capital One QuicksilverOne Cash Rewards Credit Card

Capital One QuicksilverOne Cash Rewards Credit Card

  • Intro bonus:

    No current offer

  • Annual fee:


  • Regular APR:

    26.99% (Variable)

  • Recommended credit:

    (No Credit History)

  • Learn moreexterna link icon at our partner’s secure site

Bottom Line


As with all of our credit card reviews, our analysis is not influenced by any partnerships or advertising relationships.

If your credit score isn’t great and you want to start building the credit foundation to move in the right direction, the Indigo Platinum Mastercard can help by reporting your usage to the three credit bureaus — if you practice good habits that will reflect positively on your report. But you may also take on a pricey annual fee and risk high utilization due to the card’s low credit limit. Before applying, consider other cards for bad credit and secured credit cards with no annual fee that may better serve your credit-building goals.

Frequently Asked Questions

The Indigo Platinum Mastercard is a decent option for consumers with poor credit who don’t want to put down a security deposit on a secured credit card. Check your prequalification terms, and compare other options for people with fair credit or bad credit before applying.

The credit limit for the Indigo Platinum Mastercard is $300. If you get approved for a version with an annual fee, your annual fee will be deducted from your credit limit.

The Indigo Platinum Mastercard is an unsecured credit card, so you do not have to put down a cash deposit as collateral.

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Akron community supports council recommendations on police reform



Doug Livingston
| Akron Beacon Journal

Critics on either side of the police reform debate see promise in what Akron City Council has done.

The union representing officers “can work with” the eight recommendations in council’s 22-page report on Reimagining Public Safety, which was released publicly this week.

The head of the Akron NAACP is applauding the time and consideration council committed to do “something that definitely needed done.”

And the Rev. Greg Harrison, a retired Akron detective a regular critic of local lawmakers who fail to understand the inner working of the city’s police force, praised council members for allowing officers to educate them on policing in Akron before putting together “substantial” and “solid” recommendations.

“I am very surprised, because really I did not think that the council was going to come up with such substantial recommendations,” said Harrison. “I am surprised, but I’m happy. I think the recommendations, if implemented, put us light years ahead of what any task force can come up with.”

Eleven of the 13 City Council members present Monday afternoon unanimously supported a resolution adopting the recommendations. But that’s all they are, at this point: recommendations to work with the next police chief, the mayor and community partners to craft legislation after collecting public input.

And some of these recommendations have been recommended before.

The first — to give the city’s independent police auditor enough staff and resources to do his job — has been sought by the community since the position was created in the early 2000s. It was a priority in a 2011 report by the Police Executive Research Forum, an independent firm of law enforcement experts who dived into policing in Akron when leaders kicked around the idea of reforms more than a decade ago.

“I want to applaud them for taking the time to do what they did,” Judith Hill, president of the Akron NAACP said after looking over the recommendations. “I think it was important and it was something that definitely needed to be done.

“And I know this is the beginning of a process,” she continued, “but I don’t see anything that sets aside funding to support changes.”

Some recommendations, like crisis intervention training to all officers, identify limited funding as a barrier.

On that, Fraternal Order of Police Lodge No. 7 President Clay Cozart agrees with some of the loudest advocates for change.

“It’s going to require more officers. It’s going to require more training. And it’s going to require more funding, and that’s probably the most difficult issue to tackle,” Cozart said.

He added that he found it “disingenuous” that council, though reaching out to him Sunday, waited until 10 minutes before the recommendations went public on Monday to share them with him.

General approval of the eight recommendations, which can be viewed at, was not without some concern. The Beacon Journal sought but received no comment from Police Cheif Ken Ball, who is retiring in February, or Maj. Michael Caprez. 

Cozart said ramping up foot and bike patrols is fine, as long as an officer in danger isn’t left high and dry because backup is walking to get there.

Harrison paused when he got to language about hiring. Candidates are screened and questioned on their bad credit reports and drug offenses, which could be minor and nonviolent. This interview process, which involves a lie detector test, determines whether they get hired.

“They have absolute control of recommending or not recommending them,” Harrison said of sergeants doing the background investigations of potential cadets. “When they say it’s an honesty issue, that’s a judgement call. And when you’re talking about implicit biases, a lot of those biases come into play.”

Hill said she and members of her community have a strong interest in some citizen oversight committee. Council, instead, recommended strengthening the police auditor’s position, which Hill said she was something sought “across the board” in the community.

Now, she said, lawmakers need to find ways, in conjunction with the mayor and Akron police and community partners, to fund these recommendations and benchmark progress by collecting data today “to see how changes are affecting policies and procedure” after implementation.

“I was pleased to see all of the progress our city is making both in structure and inclusive thinking to better benefit Akron citizens and help our police department both reflect and serve the community more effectively,” added Bree Chambers, president of Akron Minority Council. The group of youth-led social justice advocates handed the mayor and council a list of police reforms in July, including a “great many” of that are “outlined or alluded to” in council’s recommendations.

As council works to legislate the recommendations, University of Akron Sociology and Anthropology Department Chair Rebecca Erickson has been asked to host virtual town hall meetings with residents in every city ward. Faculty and students will facilitate the conversations generated by the recommendations. Erickson said police officers will join the discussion by the end of the spring semester as a community survey solicits broader feedback.

Council President Margo Sommerville said that since council announced the special committee on Reimagining Public Safety in July, the public has asked when they would get the chance to speak on the topic of policing and community relations.

“Maybe there’s something that we missed that needs to be addressed,” Sommerville said. “So, we want to give the public that opportunity to do that. We’re really excited about this partnership and collaboration with the University of Akron because that too is something that we have not tapped into enough.”

Prior to approving the recommendations, council members thanked police officers and command staff who educated the special committee’s four working groups. It was enlightening, they said.

“We are probably far more advanced than many police agencies in terms of incorporating social services in to the police work that we do,” said Councilwoman Linda Omobien, the director of clinical services at Community Support Services.

“The Akron Police Department liaisons showed that this is an institution that has led the way on many of these issues, like on Crisis Intervention Team training. At the same time, they really showed that they want to keep moving forward,” said Councilman Shammas Malik, who was regarded by colleagues on council as critical to the success of a fact-finding, deliberative process that spanned five months and 22 meetings.

“It would not have been possible if not for him,” Sommerville said.

Malik credited Sommerville’s leadership as the driving force in “something that council hasn’t done before.”

“When we talk about building equitable policing, when we talk about improving community trust with law enforcement, here are ideas that I think we can all get behind,” Malik said. “Getting community input through the University of Akron is going to be important.”

Councilman Russ Neal said the process council started in September to better understand policing is a model for understanding and legislating solutions to other complex problems like housing high utility costs in the city. Neal asked council to consider more staff to help them dive deeply into other issues.

Along with involvement, Cozart said the union supports legislation that is grounded by facts. The process led to “more enlightenment and education on both sides,” he said.

“Change has to occur,” Hill said. “And it’s going to be a win-win for everyone once we get through the process.”

Reach reporter Doug Livingston at [email protected] or 330-996-3792.

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How Are Car Loans Amortized?



Auto loans use simple interest, which means the balance of your auto loan determines your interest charges. An amortization schedule outlines how your interest and principal are paid in a simple interest loan. Here’s how simple interest works, and how you can save money when you finance a vehicle.

Auto Loan and Simple Interest

A loan that amortizes means that the principal is reduced over time, and requires monthly (or regular) payments. Your monthly payments are applied to both the principal of the loan and your interest charges that accrue. Most car loans use a simple interest formula. This means that your interest charges accrue daily based on the balance of your principal. The less you owe, the less you pay in interest charges.

The benefit of a simple interest formula is that with each on-time payment, you’re reducing your interest charges because you’re lowering your principal balance. This also means you’re charged less interest each time your payment rolls around.

To see how much interest you’re charged per payment, you can look up an amortization schedule and enter your auto loan terms. Here’s a quick example:

Auto loan terms:

$20,000 car loan / 60-month loan term / 10% interest rate / $424.94 monthly payment

  • First payment of $424.94:
    • Interest $167 / Principal $258 = Balance $19,742
  • Second payment $424.94:
    • Interest $165 / Principal $260 = Balance $19,481
  • Third payment $424.94:
    • Interest $162 / Principal $263 = Balance $19,219

As you can see, with each monthly payment you lower how much you pay in interest charges. Since there’s less interest accrued, more of your monthly payment is applied to your principal every month.

Planning Your Next Car Loan

How Are Auto Loans Amortized?Now that you know how auto loan amortization goes, you can plan your next car loan with confidence. It’s important to set yourself up for success and choose loan terms that benefit you.

While you may have some say in your loan terms, your credit score is a major player in qualifying for vehicle financing and determining your interest rate. With a low credit score, you’re more likely to qualify for a higher interest rate. If this is the case, then it’s typically more beneficial for you to choose a shorter loan term and/or a more affordable vehicle.

Opting for an expensive vehicle with a long loan term and a high interest rate puts you at risk for negative equity. Negative equity is when you owe more on the car than it’s worth. A higher interest rate can mean more of your monthly payment is applied to interest each month, and less to your principal – which can make it hard to lower your loan balance quickly.

If you’re a bad credit borrower and you’re concerned about paying excessive interest charges, it’s wise to choose a used vehicle. They’re usually more affordable, and you’re more likely to qualify for a loan on a lower sticker price.

Another way to reduce interest charges is by putting more money down on the loan. Saving a large down payment can take time, but lowering your loan amount means fewer interest charges can accrue.

If you have poor credit, a down payment requirement is customary. A good savings goal is at least $1,000 or 10% of the vehicle’s selling price. Most subprime lenders require at least that, and you can always put more down. The more cash you bring to the table, the fewer interest charges accrue over the course of your loan.

Take the Leap Into Vehicle Financing

Being prepared for an auto loan is a great first step in financing a vehicle. However, with a lower credit score, it can be difficult to find a lender that can assist you. There are lenders willing to help borrowers with credit challenges, though: subprime lenders.

These lenders look at more than your credit reports. Instead of just relying on your credit history, they examine your income, overall stability, and require a down payment. They’re signed up with special finance dealerships and we want to help you get in touch with one.

Here at Auto Credit Express, we’ve created a network of dealers that are signed up with subprime lenders, and we’ve been helping borrowers find lending resources for over 20 years. Get started today by completing our free auto loan request form. Using our network, we’ll look for a dealership in your local area that has bad credit options. Take the leap into vehicle financing with us today, with no cost and no obligation!

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