How to Buy a Sweater Without Cash or a Credit Card
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Here's your money briefing. I'm J.R. Whalen at The Wall Street Journal in New York. It's pretty well known you can buy a refrigerator or a large furniture and work out a loan arrangement and pay it off over time. What's not pretty well known is you can do the same thing with a sweater or a pair of sneakers. And you don't have to have a credit card or enough cash in your pocket. We'll explain in a moment. First, some money and market news you should know. Consumer spending is the driving force behind the U.S. economy, and for more than a year, strong spending has been a bright spot. But consumers cut back on their spending in August. The Commerce Department says that spending edged up a tenth of a percent in August over July.
That's significantly lower than the average half percent that spending rose per month going back to January. But these numbers might not mean gloom and doom. Economists say much of the spending decline was due to lower energy prices. Spending on big ticket items like cars and furniture actually increased. That could be because inflation was virtually unchanged in August after ticking higher in previous months. But economists expect inflation to rise in the coming months as workers' wages continue to grow and borrowing costs remain low. And cord cutters who are canceling pay TV channels are forcing AT&T-owned DirecTV to rethink carrying the NFL's Sunday ticket package, which allows viewers to watch games televised outside their local area.
DirecTV currently pays about $1.5 billion in rights fees per year. but the Wall Street Journal reports it loses more than half a billion dollars a year on the package. About two million people currently pay for the service, which launched in 1994. But NFL fans don't panic yet. DirecTV's current deal with the NFL runs through 2022, and AT&T CEO John Stanky says he'd be open to sharing the NFL package with other platforms if that brought the cost down.
You're browsing the store shelves or scrolling online and you come upon a fantastic cardigan sweater. You've got to have it. But you don't have enough cash. You haven't qualified for a credit card. No problem. A growing number of merchants are offering payment plans that allow consumers to buy the sweater right then and there and pay off the cost in installments. We've got Wall Street Journal reporter Anna Maria Andriotis here in our studio to explain. So, Anna Maria, this sounds like a credit card purchase, but it's actually a loan.
It's an alternative to a credit card purchase. It is a loan in the industry. It's called a point of sale installment loan. Essentially, it's a loan that people can use that allows for them to pay for the items that they've bought in equal sort of fixed monthly payments. There is a clear start and a clear end date to that payment plan. Now, these payment plans have existed for a very long time for big ticket purchases. Think about you know, when you've bought your refrigerator or furniture for your home. But what's happening right now is that these installment plans are becoming more and more common for small ticket items. So think sweaters, toys, school supplies, a variety of everyday products.
And depending upon which company is offering this loan, there are varying installments and there's interest on the loan. Are there fees involved?
Fees vary by the company that's providing the product. Oftentimes there is an interest charge and no fees. but there could be late fees if you don't pay. So the structure of the charges varies, but oftentimes the charges associated with these loans can be cheaper than carrying a credit card balance. So there's two types of consumers who these plans really cater to. One are people who can't qualify for credit cards. Some of these lenders are more flexible with their lending standards. will at times review other types of data on people that credit card lenders aren't reviewing to approve them. And then there are people who have credit cards or could qualify for a credit card but prefer to use these types of payment plans because of their benefits.
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